Djokovic was released from Australian immigration detention on Monday after winning a court challenge to remain in the country to pursue his bid for a record 21st Grand Slam title at the Australian Open.
"Whether or not I agree with Djokovic on some things, justice has spoken and has said that he has the right to participate in the Australian Open and I think it is the fairest decision to do so, if it has been resolved that way. I wish him the best of luck," Nadal told Spanish radio Onda Cero on Monday.
After being denied entry into Australia for arriving without being vaccinated against Covid-19, Djokovic, 34, was detained by officials at the border on Thursday amid a storm of protest about the decision to grant him a medical exemption from vaccination requirements to play in the Australian Open.
"On a personal level, I'd much rather he didn't play," Nadal said, laughing along with interviewer.
"It's sports, many interests move around it, on a general level, at an economic, advertising level. Everything is much better when the best can be playing," Nadal said, before once again defending vaccination.
"The most important institutions in the world say that the vaccine is the way to stop this pandemic and the disaster that we have been living for the last 20 months."
Meanwhile, Nick Kyrgios could miss the tournament after testing positive for Covid-19 a week before his home Grand Slam.
The 26-year-old withdrew from the Sydney Tennis Classic on Monday and used social media to reveal his positive test.
“Hey everyone, I just want to be open and transparent with everyone, the reason I have had to pull out of Sydney is because I tested positive for Covid,” he wrote on an Instagram story.
“I am feeling healthy at the moment with no symptoms. I wish everyone all the best and to stay safe where you can. If all goes well I will see you at the Australian Open.”
Last week the world No 114 had withdrawn from the Melbourne Summer Set, saying an illness had sparked asthma issues, but added that a number of Covid-19 tests in the preceding days had been negative.
With the Australian Open due to begin on January 17, Kyrgios has only a few days to recover and be cleared to return. He has not played competitively since September.