David Nalbandian, who will be playing in his third final for Argentina, was left out of the singles draw and will instead partner with Eduardo Schwank in Saturday's doubles.
The second-ranked Nadal will return to the Olympic Stadium, where he helped Spain win the title in 2004, to face the 26th-ranked Monaco in the opening match of the best-of-five series. Fifth-ranked David Ferrer will then play Juan Martin del Potro.
Nadal and Ferrer are a combined 25-0 on clay for four-time champion Spain.
On Saturday, Nalbandian and Schwank will face Feliciano Lopez and Fernando Verdasco. The reverse singles are set for Sunday.
Spain beat Argentina in the 2008 final without Nadal.
Nalbandian hasn't played since mid-October, so Argentina captain Tito Vazquez decided to save the 2002 Wimbledon finalist for doubles, which is where the South Americans may have an advantage. Schwank, who is 2-0 in doubles on clay, replaced Juan Ignacio Chela.
Nalbandian could still play Sunday if needed.
Nadal is coming off a disappointing ATP World Tour Finals in London, where he was eliminated in the first round and said he felt less passionate for the game.
But while Nadal surrendered the No. 1 ranking to Novak Djokovic at Wimbledon, his Davis Cup record has been a perfect 18-0 record since losing in his debut in 2004. That same year he went on to beat Andy Roddick in singles to help Spain defeat the United States for the title at the same venue in Seville.
Spain is playing in its sixth final since its first Davis Cup win in 2000. The Spanish also won in 2004, 2008 and 2009.
