Nadal had a 5-0 record against Zverev but had an uncharacteristically mistake-filled performance at The O2 arena.
In his first match since pulling out of the Paris Masters semifinals with an abdominal injury just nine days ago, Nadal dropped his serve three straight times and didn't force a single break point. His normally powerful forehand was responsible for more than four times as many unforced errors (13) as winners (3).
The whole thing was over in just 83 minutes, and it means Zverev has beaten each of tennis' Big Three in his last three matches at the O2.
Nadal has a history of being far from his best at the ATP Finals, which are at the end of a grueling season that often takes its toll on Nadal because of his ultra-physical playing style. He has qualified for the event for 15 years in a row but has pulled out of it on six occasions because of injuries. He has never won the title, reaching the final twice.
This year, he hasn't finished a tournament since winning the U.S. Open in August, also pulling out of Shanghai because of a hand injury. But he showed up to London hoping to stave off Djokovic for the year-end No. 1 ranking.
Djokovic won his opening match Sunday, and this loss cuts Nadal's lead over him to just 440 points in the rankings table -- each round-robin win is worth 200 points -- with a total of 1,300 more points up for grabs for each player.
Not only because Tsitsipas was also 0-5 against Medvedev before winning 7-6 (5), 6-4, or even that it came in his ATP Finals debut.
But mainly because two of the biggest rising stars in tennis simply don't like each other that much.
"It's a victory that I craved for a long time now, and it's great that it came at this moment," Tsitsipas said. "Our chemistry definitely isn't the best that you can find on the tour. It's not that I hate him, [but] we will not go to dinner together."
The grudge dates to their first meeting, in Miami last year, when Medvedev berated Tsitsipas for not apologizing after hitting a net cord during a point, a spat that ended with both players trading insults on court.
"After that, I think I didn't win a single game. He did get into my head, and I was very frustrated that it did go this way," Tsitsipas said. "He started telling me that I should apologize, that what I do is unsportsmanlike. Somehow it did affect me. I did get [angry] and said what I said, which I do regret, but at the time I was very frustrated."
Since that match, Medvedev had earned another four straight wins over Tsitsipas, including in the Shanghai semifinals in October.
But on Monday, the sixth-seeded Tsitsipas earned the only break of the match to take a 5-4 lead in the second set and clinched the win with a forehand overhead at the net.
"He was better today, but I felt like I was missing some things," Medvedev said. "This frustrates me after. I do think it would frustrate me against any other opponent. I hate to lose against anybody. Of course I wanted to make it even more bigger head-to-head, but it's the way it is."
Both players are making their debut at the year-end tournament for the world's top eight players, which features a round robin before the semifinals. Medvedev established himself as one of the best hard-court players on tour this season, reaching the U.S. Open final and winning four titles on the surface.
But Tsitispas -- the first Greek player to qualify for the ATP Finals -- used an aggressive forehand to keep Medvedev from dictating the match, coming to the net 26 times and winning 22 of those points.