Nadal is looking to win an 11th title in the south of France but will not need to get beyond his biggest rival.
Novak Djokovic is in action as he bids to return from injury.
But Federer decided earlier this year to skip the whole clay season as he looks to prolong his career.
Federer missed the whole season last year and was able to finish the year with two Grand Slam crowns and back at No 2 in the world.
And, after disappointment in the Sunshine Double – Indian Wells and the Miami Open – Federer opted to miss the clay schedule again.
Why is Federer not playing in Monte Carlo?
“I decided not to play the clay season,” he said after the first round defeat to Thanasi Kokkinakis at the Miami Open.
“I am trying to figure things out now, I have some time.
“I’m a positive thinker, every match is another opportunity.
“You take a break, get away from it all, and get back to practice court and work.”
The 36-year-old won the first slam of the year in Australia but will not play another until Wimbledon and is taking a break before preparing for the grass season.
He beat Marin Cilic in last year’s Wimbledon final but was forced to pick and choose his events carefully to allow him time to recover and produce his best around the big events.
And he is doing the same thing this year as he looks to prolong his career.
His fitness coach Pierre Paganini revealed the difficulties in playing on clay earlier this year.
“The advantage when you play on clay for the joints is that there is less shock because there is the slide, and the disadvantage of [playing on] hard courts is that shock,” Paganini, who has been working with Federer for around 20 years, had said.
“But the advantage on hard courts is that the shock is brief. In contrast, the disadvantage with the slide on clay is that there is a lot of vibration in the joints.
“We don’t see it from the outside, but to control this slide there is instability in the knee, the foot, the ankle.”
Federer is constantly fighting off retirement talk and wants to keep winning titles.
Federer now has 20 Grand Slams and is 2nd in men’s career titles with 97 behind only Jimmy Connors on 109.
And Sky Sports analyst Annabel Croft believes he will keep going until his legacy as the greatest ever player is insured.
“I definitely think he’s after the legacy,” she told Express Sport in January.
“That will keep him going until his body can’t continue because he’s got to stave off Nadal and that’s what keeps it exciting for the pundits and fans because it’s another subplot.
“Not only is it special to see them play but we don’t know how long they’re going to be around so there is that subplot going on in the background and it is an amazing, amazing era in tennis.”