Nadal tied Novak Djokovic for the all-time lead in Masters 1000 titles with 30.
The 14-times grand-slam victor broke in the opening game of the second set and saved a break point in the next, maintaining a two-game advantage until a thrilling 10th game.
Nadal edged a bruising first set after blowing eight break points with a top-class tiebreak, playing adventurous shots which sapped Goffin's energy and the world number 10 ceded the final point with a double fault.
Talking about the match he said: "I think it was a tough match since the beginning, especially here in altitude, which is hard to make breaks against a player like Thiem". In what was billed as a must-see semi-final against Djokovic, Nadal turned the tables on the Serbian, hitting him off the court to end a seven-match losing streak against the World No. 2. I did well in Monte Carlo and Barcelona, and also here. Tomorrow I'll wake up with joy, and I will want to do things even better.
Nadal with the win will surpass Roger Federer on the ATP Rankings, rising to No. 4, while Thiem moves up to a career-high No. 7. "I am always very nervous and emotional to play a final in Madrid", a relieved Nadal said after Sunday's win, via Yahoo Sports. After that I went for it..
Nadal, a four-time champion in Madrid, had an easier time in the second set after earning an early break, and closed out the match with another at the end. "I'm very happy at the moment", said Thiem. And the outcome of that match would give us an idea of what might transpire in Rome, and more importantly Roland Garros starting later this month. Nadal improves to 4-1 lifetime over the 23-year-old with today's win, and 34-5 in 2017 (15-0 on clay).
It was the first title of the season for the eighth-ranked Halep, who was the first player to make it to three Madrid finals.
"I know Novak has made some changes in his coaching staff and I am sure he is a rival who is going to battle for all of the major titles in the future", added Nadal who will now face either Pablo Cuevas or Domenic Thiem in Sunday's final. The champions have claimed 60 of the past 65 Masters 1000 crowns, dating back to 2010 Monte-Carlo.
Rafael Nadal is now on his customary clay cruise this time of the year, something we did not witness over the past couple of seasons.
It's not fair to say he hasn't been tested at times - Kyle Edmund and Fabio Fognini both put up considerable fights against the king of clay - but Nadal has passed every test of the claycourt season so far. "I hope you understand and respect that".
He flirted with a break point to level at 5-5 while Nadal was serving for his fifth title in Madrid - a Demi-Decima, if you will. Thiem threw everything but the kitchen sink at Nadal, and he just kept coming, finally converting on his fourth championship point to lift a fifth Madrid title.