The Spaniard, seeking a first title at the event and hoping to secure the year-end number one ranking for a fifth time, showed no sign of the abdominal injury sustained in Paris this month, but was comprehensively outplayed.
Djokovic will finish the year as world number one if he wins the tournament and Nadal does not reach the semi-finals.
Alternatively, if the Spaniard fails to win a round-robin match, the Serb will overtake him if he wins two group-stage matches and reaches the final.
Seventh seed Zverev has now beaten Roger Federer, Djokovic and Nadal in consecutive matches at the venue, where last year he claimed the biggest title of his career.
Since stunning Djokovic in last year’s final, the German has won just one title and failed to make deep runs at the Grand Slams – with his best showing a French Open quarter-final.