Federer defeated Steve Johnson of the United States in a competitive match, with neither player managing to break serve throughout. 

The 35-year-old Swiss edged the tight contest 7-6, 7-6 at the Indian Wells Tennis Garden.

"I'm very excited," said Federer.

"That's why I came here, to play against guys like Rafa.

"Now we have it.

"Australia helps me a little bit, but at the end of the day, I'm still in the comeback. 

"I try to see it really as another opportunity to build upon something for the rest of the season.

"So regardless of Australia, winning or losing, I'm going to try to go out there and try to play free again.

"I feel like tomorrow if I move well, I will definitely have a chance against Rafa."

Nadal, meanwhile, collected a much more comfortable 6-3, 7-5 win over compatriot Fernando Verdasco to set up a 36th meeting with Federer.

Their last meeting came just under two months ago when Federer got the better of his old adversary in a five set classic in the final of the Australian Open in January.

Elsewhere in the men's singles today, world number two Novak Djokovic of Serbia defeated Argentina's Juan Martin del Potro.

The 29-year-old claimed a 7-5, 4-6, 6-1 win.

Djokovic will now meet Australia's Nick Kyrgios for a place in the quarter-finals after he brushed aside Germany's Alexander Zverev 6-3, 6-4.

Germany's Angelique Kerber, seeded second in California, was eliminated by Russia's Elena Vesnina in the women's singles competition today.

Kerber is set to become the world number one after the conclusion of the tournament, following the withdrawal of Serena Williams of the US, but she fell to a 6-3, 6-3 loss.

It was the Russian's first win against a top-three player in her career and it will now see her meet Venus Williams of the US in the quarter-finals.

She was forced to come from behind to beat Peng Shuai of China, the last remaining qualifier in the draw, 3-6, 6-1, 6-3.

World number three Karolína Plíšková of the Czech Republic also reached the quarter-finals after her opponent, Timea Bacsinszky of Switzerland, retired with the score at 5-1 to the former in the first set of their match.

She will now meet defending French Open champion Garbiñe Muguruza of Spain for a place in the semi-finals after she won 7-6, 1-6, 6-0 against Ukrainian Elina Svitolina.

Former world number one Caroline Wozniacki of Denmark, who won this tournament in 2011, was also victorious today after she overcame American Madison Keys 6-4, 6-4.