Ruud, who lifted his maiden Masters 1000 title in the Spanish capital last year, sustained a leg injury and was forced to retire from his third-round match at the Monte Carlo Masters against Felix Auger-Aliassime earlier this month.
The Norwegian then ramped up his comeback under the close watch of 22-times Grand Slam champion Nadal.
"I'm happy to say I'm fully recovered,” Ruud said in Madrid.
"I was a bit worried at first, I thought Madrid would be tough. But I've had good days of recovery. I spent a week in Mallorca, training at Rafa's academy and working on fitness off the court. I'm really pleased to be here, ready to compete again."
Ruud said he was inspired by the now-retired Nadal’s determination during a glittering playing career that came to an end in 2024.
“If there's one thing you can learn from him, it's determination,” Ruud added.
“He never gave up, and he was able to win many matches without being at his best because he was so well prepared physically and mentally.
"There are so many things you can learn from Rafa. This time, we didn't spend much time together on court. He encouraged me to keep going and told me I have plenty to fight for in the coming weeks."
Ruud begins his Madrid campaign against Jaume Munar or Alexander Shevchenko in the second round.
The twice French Open runner-up is eyeing a strong run in the weeks leading up to Roland Garros, which begins on May 24.