"I played a very good match against a very good player tonight and I will have to play best to win tomorrow," Nadal said. "It's going to be very tough because he is playing with a lot of confidence."
Nadal and Djokovic will play for the No. 2 ranking. If Nadal loses, Djokovic would replace him. The Spaniard has been ranked second for a record 147 consecutive weeks.
The top-ranked Federer, seeking his fifth title in Hamburg, broke Verdasco's serve once in the first set.
Verdasco, who lost in the first round to Federer in Hamburg three years ago in their only previous encounter, had his right foot taped after taking a 3-2 lead in the second set and didn't win another game.
"I felt a sharp pain in my ankle in the fourth game, just when I was making him suffer," Verdasco said.
Federer said it was a pity Verdasco hurt his foot, although he didn't think it mattered much in the end.
"But it was a tough match. He has a perfect game to upset anyone on any surface," Federer said. "He was aggressive with his backhand and he surprised me. It took me a little time to adjust to a lefty."
Federer has won only one title this year, at a relatively small clay-court tournament last month in Estoril, Portugal.
He lost his sixth match of 2008 in the Rome Masters quarterfinals last week, to Radek Stepanek, but has eased through his first three matches in Hamburg without dropping a set.
The tournament is a major warmup for the French Open later this month, the only Grand Slam title that Federer has yet to win.
Djokovic won the last four games of the first set and the last three of the second to breeze into the semifinals.
"That was the idea, trying to finish as fast as possible," Djokovic said.
He is seeking back-to-back titles after winning in Rome last week and also captured the first Grand Slam of the year, the Australian Open.
"I've gained mental experience and physical strength, I feel at the top," Djokovic said.