Nadal says he will make decision on future 'after Olympics' following loss to Djokovic
"When this tournament is over, I will take the necessary decisions based on my feelings and desire," said Nadal, after losing 6-1, 6-4 in his 60th career meeting with Djokovic.
Nadal, playing in just his seventh tournament of the year after another campaign disrupted by injuries, admitted that at 38 he did not "have the legs of 20 years ago".
The Spaniard, a gold medallist at the Olympics in singles in 2008 and doubles at Rio eight years later, won the last of his 22 Grand Slam titles when he captured a 14th French Open in Paris in 2022.
His ranking, which once stood proudly at number one, has slumped to 161 in the world.
In May, he suffered his first-ever opening-round loss at the French Open and then skipped Wimbledon to focus on the Olympics.
"For many people it makes little sense, I have been suffering for two years," added Nadal who described Monday's loss as "tough".
"If I feel that I am not competitive I will make the decision to stop. I just try my best every single day, trying to enjoy a thing that I have been enjoying for so much time.
"I have been suffering a lot of injuries the last two years. So if I feel that I am not competitive enough to keep going or physically I'm not ready to keep going I will stop and let you know."
Despite his defeat, Nadal still has hopes of a gold medal in the men's doubles where he is playing alongside Carlos Alcaraz.
Monday's win was 24-time Grand Slam champion Djokovic's 31st in a rivalry which began on the same Roland Garros clay courts in 2006.
Nadal was largely outclassed in the much-anticipated encounter, only coming briefly to life when he won four games in a row in the second set.
"I'm very relieved," said Djokovic after the second-round win.
"Back in 2006, I don't think we would have thought we would be playing against each other on the same court at the Olympics."
Nadal conceded that Djokovic was the better player throughout the contest.
"Playing against Novak, without creating damage to him and without having the legs of, 20 years ago is, is almost impossible now."