Djokovic favourite for Aussie Open four-peat
Novak Djokovic serves during an Australian Open practice session in Melbourne on January 12, 2014
While Serena Williams is the unbackable favourite for the women's trophy, Djokovic and Nadal, the world number one, are nearly inseparable at the top of the men's game.
When they last met in Melbourne in 2012, it took five hours and 53 minutes, the longest ever Grand Slam final, before Djokovic finally prevailed in five exhausting sets.
Nadal missed last year's Australian Open with injury but on his return, he denied Djokovic in the French Open semis and US Open final before supplanting him at the top of the rankings.
However, Djokovic beat Nadal convincingly in two deciders in the latter part of last season, including at the year-ending World Tour Finals, to seize back the psychological advantage.
"It is difficult to see Rafa losing to anyone other than Novak and possibly Andy Murray," Jim Courier told Melbourne's Herald Sun newspaper.
"Novak Djokovic suffered some tough losses to Rafa last year but was able to beat the Spaniard twice in the fall so momentum in their rivalry is now on his side."
Djokovic has repeatedly shown his liking for the season's opening Grand Slam after winning his first major title in Melbourne in 2008 and reclaiming it in 2011, 2012 and 2013.
The Serb, the only man to win three straight Australian Open championships since Roy Emerson claimed five in a row in the pre-professional era, also has the easier draw, with Stanislas Wawrinka and David Ferrer shaping as possible opponents.
Meanwhile, Nadal stands to meet Grand Slam champions in the form of Juan Martin del Potro and either Andy Murray or Roger Federer ahead of a potential final rematch with Djokovic.
All players are braced for extreme heat in the first week with temperatures set to soar above 40 Celsius (104 Fahrenheit) from Tuesday onwards.
"I am expecting to play in big heat. You always have to expect because you can't really predict Melbourne's weather, it's changing a lot," Djokovic said.
"But I remember the 2008, 2009 and 2010, there were several days I played in extreme heat. So I know how tough it is."
Djokovic has hired Boris Becker as one of a number of celebrity coaches who will appear on the sidelines this year, including Stefan Edberg who is working with Federer.
The 17-time Grand Slam winner, now 32 and ranked sixth in the world, is considered an outsider for the title as he enters a record 57th consecutive major championship.
Wimbledon champion Murray is also tentatively returning to action following back surgery, putting a question mark over his bid to end a run of three final defeats in Melbourne.
In the women's draw, Williams' bid to match Chris Evert and Martina Navratilova's 18 Grand Slam titles looks strong after she lost just five times last year and won her warm-up event in Brisbane.
"It would mean a lot to be on the same level as such great players at Chris Evert and Martina Navratilova," said Williams.
"I still have a lot of work to do. I obviously want to be able to reach that level, but I'm not there yet. Hopefully I'll get there."
Victoria Azarenka is the defending women's champion while China's Li Na, the beaten finalist last year and in 2011, is hoping to land her second Grand Slam title.