The Swiss defending champion dropped his only sets of the tournament before completing a 6-2, 6-7 (5/7), 6-3, 3-6, 6-1 win over the sixth seeded Croatian in 3hr 3min.
Cilic, the world No. 6 and former US Open champion, won 3-6, 6-3, 6-7 (5/7), 6-2, 2-0 in 3hr 47min on Rod Laver Arena when Nadal retired in pain early in the fifth set.
Roger Federer went through round-robin play at the ATP Finals undefeated for the 10th time as he returned to haunt Marin Cilic with a 6-7(5) 6-4 6-1 win at the O2 Arena on Thursday.
Maria Sharapova rolled into the last 16 at the US Open by overpowering US teen Sofia Kenin on Friday while a wide-open side of the men's draw lost 2014 champion Marin Cilic.
Indonesia's president said on Tuesday the planned execution of 11 convicts on death row, most on drugs charges, would not be delayed