The Serbian, who will return to world number one next week, was 6-1, 2-1 up when a back injury got the better of his Bosnian opponent.
"Reflecting on what I've been through in the past year, it's quite a phenomenal achievement", said Djokovic, who won Grand Slam titles at Wimbledon and the US Open this summer. "I would love to be in London, of course", said Nadal, who will wait on making a decision on his participation at the season finale.
"I always believe in myself but, five months ago, if you'd told me I would be back to No.1 so quickly, it was highly improbable considering my ranking and the way I played and felt on the court".
Nadal's withdrawal from Paris means that he will be replaced by Novak Djokovic at the top of the world rankings when they are released next Monday.
The night session will be opened by Federer against Fabio Fognini, then Kei Nishikori will face Kevin Anderson.
Zverev next faces unseeded Russian Karen Khachanov.
The Spaniard was due to make his first appearance since retiring in the US Open semi-finals in September at the Masters 1000 event in the French capital.
The giant American saved four match points before the 22-year-old Khachanov, who had already staved off two himself, finally threaded a backhand victor past the net-rushing Isner to win after almost 2 1/2 hours of massive hitting.
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In Sao Paulo, the economic capital, Marcos Kotait, 40, a publicist, said he had "never seen such a polarized election ". Far-right candidate Jair Bolsonaro has won a sweeping victory in Brazil's presidential election .
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"Doctors recommended that I didn't play".
Djokovic and Nadal will both attempt to become five-time year-end World No. 1s at the Nitto ATP Finals, to be held at The O2 in London from 11-18 November.
The Croat reached 2016 semifinals here upsetting Novak Djokovic, and a win would increase even more his chances to be at the ATP Finals in London. "(It will be) great to play him again".
The fifth-seeded Cilic beat ninth-seeded Grigor Dimitrov 7-6 (5), 6-4, needing six set points to win the first set.
Meanwhile, fifth seed Marin Cilic cruised into the third round with a 6-3, 6-4 victory over German veteran Philipp Kohlschreiber.
First round: Fernando Verdasco bt Jeremy Chardy 6-4, 6-4; Daniil Medvedev bt Pablo Carreno Busta 6-2, 6-2; Gilles Simon bt Lucas Pouille 6-3, 6-4; Mikhail Kukushkin bt Pierre-Hugues Herbert 3-6, 6-3, 7-5; Marton Fucsovics bt Benoit Paire 6-4, 6-4; Milos Raonic bt Jo-Wilfried Tsonga 6-7 (4), 7-6 (5), 7-6 (5).
In other matches today, American defending champion Jack Sock progressed to round three.