Carlos Alcaraz, Jannik Sinner, Daniil Medvedev and Holger Rune will also play at the 'Six Kings Slam', which will form part of the Saudi cultural and entertainment festival Riyadh Season, organisers said.
With Sinner having recently won the Australian Open, Dane Rune is the only player on the six-man roster without a Grand Slam title.
Spaniard Nadal, who signed up as an ambassador for the Saudi Arabian Tennis Federation last month, said he was looking forward to the event.
"After some other tennis players have done so, I am very excited to play for the first time in Riyadh," the 22-times Grand Slam champion said in the press release.
While exhibition events in the Gulf are nothing new, they are usually played during breaks in the ATP season or after it has finished. The ATP has a full schedule in October, including mandatory Masters 1000 tournaments in Shanghai and Paris.
Saudi Arabia will also host the season-ending Next Gen Finals for men's under-21 players in Jeddah from 2023 to 2027, the ATP announced last August.
The oil-rich country has invested heavily in sports like soccer, Formula One and golf over the last few years. However, critics have accused the country of using sport to cover up its poor record on human rights and equality issues.
The debate over Saudi Arabia potentially hosting the women's WTA Finals has intensified, with tennis greats Chris Evert and Martina Navratilova objecting to the move, prompting heavy criticism from Saudi ambassador to the U.S. last week.
