Nadal withdrew from the elite, six-man field on Christmas Day, citing a stomach virus.
Almagro is ranked No 11 in the world and will be making his first appearance in the exhibition tournament that serves as a start to the 2013 season.
His most recent competitive matches were in the Davis Cup final, where he lost in four sets to both Tomas Berdych and Radek Stepanek as the Czech Republic took the Cup from Spain with a 3-2 victory in Prague.
Almagro will be replace Nadal in the bracket, as well, gaining a direct place in the semi-finals on Friday. He will meet the winner of the quarter-final tomorrow pitting Andy Murray and Janko Tipsarevic.
Almagro, 27, has 12 career ATP tournament victories, all of them on clay and the most recent in Nice in May.
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