The Spaniard, who has spent eight months away from the ATP Tour with a knee injury, will be playing his first competitive game since June.
The 11-time Grand Slam winner is scheduled to play a first-round doubles match alongside Argentinian Juan Monaco against Czech second seeds Frantisek Cermak and Lukas Dlouhy, before starting his singles campaign on Wednesday.
His coach, and uncle, Toni Nadal said: "The knee is much better, but they've told us he will feel some discomfort and lack of mobility until the end of the month. But it's definitely getting better."
The Spaniard has been training since arriving in Chile four days ago, his coach added: "His game is much better than when we got here.
"It was better yesterday and even better today. We're looking to the doubles as an added test."
Nadal practiced for 90 minutes with Nicolas Massu of Chile on Monday, his fourth straight day of training since arriving in the country for his first match in more than seven months.
Nadal said: "Of course I still feel pain in the knee that sometimes stops me from playing but you have to start some time.
"I am here to try and give my best, and hope that the knee comes through it.
"Undoubtedly, the clay surface is a little less aggressive on my knee. My aim is to compete courageously and hopefully the knee will stand up to it.
"There is always the possibility that I will lose in the first round after so many months without competing."