Djokovic, who has already clinched the year-end No. 1 ranking, had not lost at the ATP Finals since 2011, winning the last three elite titles for the top eight players in the world.
But Federer was strong at the O2 Arena, as he usually is on an indoor hard court.
The six-time champion broke Djokovic in the final game of the first set, and again early in the second. Although Djokovic broke right back, Federer regained the lead a short time later and won the final four games.
Djokovic beat Nishikori in his first match, and will face Berdych on Thursday for a spot in the semis.
In the early match, Nishikori's 7-5, 3-6, 6-3 victory over Berdych came down to one point.
With the score even at 3-3 in the third set, the sixth-seeded Berdych had his third break point of the match - after converting the previous two - but he put a backhand into the net after a long rally.
"That was a really big point. He had three, four shots that he went really aggressive," said Nishikori, who reached the semis last year in his tournament debut. "I mean, last shot, I kind of went for it, closed my eyes. Was a little bit lucky I made that shot."
"The rally starts pretty well for me, but I was not able to break him. Then I lost my serve," said Berdych, who has been defeated twice this week. "Basically, that was the difference today."
After holding serve in that game, Nishkori broke the Czech to take a 5-3 lead, and served out.
In the first set, Nishikori took the lead with a late break at love, and held serve. He broke again to start the second set and led 2-0, but Berdych won five straight games and eventually the set.
"It's going to be a really important match for both of us," Nishikori said. "I have to win the next match to qualify (from) the group. So I (will) try to recover well today and tomorrow, and I will get good tactics ready.
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