The world number one recovered from a nightmare start to seal a 1-6 7-6[6] 6-1 3-6 6-4 victory with four hours and 42 minutes on the clock.
Browsing: Carlos Alcaraz
Goals by Carlos Alcaraz and Theo Walcott inside 15 minutes gave Southampton a shock early lead.
Former world number one Williams had been handed a wildcard into the Melbourne Grand Slam but sustained an injury in the ASB Classic in Auckland.
Between 2021 and 2022 his explosion came with wins in the first tournaments, including the Masters 1000 in Miami and Madrid
It was the 19-year-old Alcaraz who came out on top 6-4 2-6 7-6[1] 6-3 to end his remarkable breakthrough season with a memorable triumph
Nadal, who returned to number two in the world last week after his thrilling win over Stefanos Tsitsipas in the Barcelona final, strolled past his 18-year-old opponent in the Spanish capital.