The Spaniard, seeded third, came into the tournament with plenty of doubt over his form but in front of his homesupport he has not yet dropped a set in his quest for a fifth Madrid crown.
Nadal decided to return to his old racket design after trying out a new style in the last two tournaments -- and it appears to be working for him.
Throughout the match, Nadal returned serve well against the 10th seeded Bulgarian, breaking Dimitrov in just his second service game with a cross court winner.
Yet the world number four did not have it all his own way as he also lost his own serve before taking control with two more breaks in the first set.
After comfortably enjoying the upper hand in the second set, Nadal told reporters: "This was a good win. I knew that I needed to play better and I think in the first set I played at quite a high level.
"I feel quite positive and I always like playing in Madrid where the people make it a lot easier for me."
Later in the quarter-finals, second seed Andy Murray meets fifth seed Milos Raonic while fourth seed Kei Nishikori faces David Ferrer and John Isner takes on Tomas Berdych.
(Writing by Tim Hanlon; Editing by Ian Chadband)
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