Nadal, who lifted the title in the Principality uninterruptedly from 2005-2012, last lost the 2013 final to Novak Djokovic.
But Spain's fifth-seeded king of clay showed hints of the form which took him to multiple seasons of total dominance on the surface as he overcame second seed Murray in a battle lasting for more than two and a half hours.
It was not all one-way traffic for Nadal, who spent 10 minutes in the final game between his first match points and his fifth in fighting off a late Murray charge.
The 28-year-old Murray saved four Nadal match points and had two break chances of his own before Nadal finally drilled over a winner which the Scot could not quite handle.
Nadal, 29, who has struggled for form in the last 18 months, will bid for a ninth title in the Principality on Sunday against either France's Gael Monfils or Jo-Wilfried Tsonga.
