Soderling, who handed the Spaniard his first ever loss on clay at the French Open this year, powered his way through the Group B match by mixing a hard forehand with a solid backhand to keep Nadal running all over the hard court at the O2 Arena.
"He is a big player in this surface, so [it] is difficult," Nadal said. "I didn't play really bad. But in the important moments, I didn't have this calm, this necessary calm, to win these matches against the best players of the world."
In the late match, Novak Djokovic rallied from a poor start to beat Nikolay Davydenko 3-6, 6-4, 7-5 and move a step closer to the semifinals of the season-ending tournament for the top eight players in the world.
The second-ranked Nadal can still advance but likely needs to win his two remaining group matches. He also has a chance to claim the year-end No. 1 ranking from Roger Federer, but Monday's loss hasn't helped.
"If you want to still talk about me [being] No. 1, I can, but I think is not the right moment. My level right now I think is not to be No. 1," Nadal said. "My level is to be still fighting and practicing hard to be ready as soon as possible to compete another time with equal conditions with everybody."
Soderling won both sets by breaking Nadal in the final game. Before the end of the first set, however, Nadal had thought he won the game and evened the score at 5-5.
Serving at 40-30, Nadal allowed himself a moment of celebration when his first serve whizzed by Soderling. But before the Spaniard was able to really let his emotions loose, his serve was called long.
Off the second serve, Nadal sent a forehand long, setting up deuce. Two more mistakes off the forehand gave his Swedish opponent the game and the set.
"After the first three games, he started to play better. But I still knew that I was serving well, and I will get my chances in his service game," Soderling said. "I tried to keep on fighting, keep telling myself that I will get one more chance this set, and I took it straight away."
Like in the first set, Nadal and Soderling traded breaks early in the second. In the final game, Nadal saved one match point when Soderling put a forehand long, but the Spaniard shanked a backhand on the second.
Nadal finished the match with 24 unforced errors and only 18 winners, while Soderling had 27 and 23. Both had five aces.
"Sometimes you have some best moments; sometimes you have little bit worse moments. This probably is one of these moments for me right now," Nadal said. "Just accept and work to improve the situation."
Nadal had won four straight French Open titles heading into the 2009 season, but Soderling beat the then-top-ranked player in the fourth round at Roland Garros. Soderling went on to reach his maiden Grand Slam final but lost to Federer.
Nadal then spent time off the court, missing out on defending his Wimbledon title because of knee injuries and later taking a second break after the U.S. Open to treat a bothersome stomach muscle.
"The second half of the year was difficult for me," Nadal said. "But I am working really hard to come back at my best level. I think I'm not far away from my best level."
The ninth-ranked Soderling was only invited to the tournament after Andy Roddick withdrew because of injury.
"I never really thought of vacation because I know I was first alternate," Soderling said. "I tried to prepare as if I was going to play. ... I wouldn't call it a free chance. I worked pretty hard throughout the year to get this chance."
Djokovic entered the tournament on a hot streak after winning his last two tournaments but struggled early against Davydenko, losing his serve twice in the first set. He grew increasingly frustrated in the second, throwing his racket in disgust after netting an easy shot that would have set up a break point in the third game.
He finally got his break to take a decisive 5-4 lead and broke again to start the third set. He then failed to serve out the match at 5-4 but broke at love in the next game before clinching the win when Davydenko sent a backhand long on the second match point.
Djokovic pumped his fist and let out a yell in celebration before the two players exchanged shirts at the net like soccer players after a game.
On Tuesday, four-time champion Federer will face Andy Murray in Group A. Both players won their opening matches on Sunday. In the other match, U.S. Open champion Juan Martin del Potro will play Fernando Verdasco.
The top two players in each group after the round-robin stage will advance to the semifinals.