Despite being in his home country, Madrid is well-known for being Nadal's "least" successful spring clay event, but he has now achieved four titles, three finals and one semifinal on red clay there, along with an early loss in 2012 when the event made an ill-fated experiment with blue clay.
Thiem also fell victim to Nadal's supreme form in the final in Barcelona two weeks ago, but there was little for the 23-year-old to be dispirited about as he pushed Nadal all the way in his first Masters series final.
Djokovic won the last meeting between the pair in the quarter-finals of the Rome Masters exactly a year ago, and Nadal had not beaten the 12-time grand slam victor since the 2014 French Open final.
He has 14-0 on clay this season.
The left-hander hardly could have asked for a better week in Madrid.
It was Nadal's 14th straight victory, and his tour-leading 33rd of the year. Nadal long held the lead but had been passed during Djokovic's torrid stretch from 2015 through the first half of 2016.
Rome, where the Spaniard is a seven-time champion, beckons.
And speaking after his defeat to Nadal, who he described as the clear favourite to win at Roland Garros, Djokovic suggested he was willing to remain patient before appointing a new coach.
Thiem, on the other hand, has also been quite impressive on the dirt this season, winning Rio de Janeiro title in February and reaching the final in Barcelona, decimating Andy Murray enroute.
Whether he likes it or not, Rafael Nadal will seek to rubber-stamp his status as the favourite for the French Open when he heads to the Rome Masters today looking to underline his return to form on clay. "I'm not thinking about the race or anything like that", said Nadal.
"Anything could have happened at the end of the first set", added Nadal. And with the Austrian feet behind the baseline after consecutive backhands, Nadal would tap a drop shot victor inside the service box.
It doesn't seem like anybody who's been playing in these tournaments can beat Nadal, in fact, he's only lost two sets in the three tournaments that he's won. Winners ended almost half of the points in the 18-point tie-break. The first game of the second set suggested not: two dire misses and it was break point, and a netted forehand finished it off.
Given his past record in Rome - Nadal won seven titles from 2005 to 2013 - the 30-year-old Spaniard can look forward to a rousing reception from the notoriously noisy Rome crowd.
He continued his resurgence in the next game and forced four break-back opportunities but Nadal, not renowned as a huge server, came up with some big ones when it mattered.
Also, John Isner defeated 14th-seeded Albert Ramos-Vinolas 6-7 (4), 7-6 (4), 6-1.