The ranking swapped hands for a sixth time this year when Federer beat Nick Kyrgios to progress to the Stuttgart Open final.
The Swiss star set up a Sunday showdown with Milos Raonic after being taken the distance by Kyrgios.
Nadal has withdrawn from Queen’s next week so Federer will head into Wimbledon next month as the best player in the world.
And the 36-year-old has explained how much he enjoys the tussle with his arch-rival for the top honour.
“It’s great for the fans that it’s been going back and forth (between himself and Nadal),” Federer said.
“It’s quite fun at the moment.”
After Federer has taken on Raonic in the final he will head to the Halle Open before Wimbledon.
And he has given himself a rallying call to now begin building momentum ahead of the third Grand Slam of the year.
“My season starts now,” he added.
“I’m playing next week (Halle) and Wimbledon. We will see about Canada (the Masters event in August).
“I don’t have much (schedule) wiggle room, I’m playing as much as possible.
“There was not a lot of talk about number one over the past four years, it’s been exciting over the last few months.
“These kind of matches (for the top spot) don’t come around so often.”