The 20-time Grand Slam champion will play doubles with Nadal, who has won 22 majors, at the O2 arena in London on Friday.
Federer, whose most recent competitive match was a loss to Hubert Hurkacz in last year's Wimbledon quarter-finals, has been struggling with a knee problem and will not play singles in London.
"I'm not sure if I can handle it all but I'll try," said Federer.
"This one feels a whole lot different. I'm happy to have him on my team and not playing against him.
"Playing with Rafa feels really different. To be able to do it one more time, I'm sure it will be wonderful and I'll try my very best. I'll enjoy it but it will be very hard."
Federer announced last week he intended to retire after the three-day Laver Cup.
He said on Wednesday that finishing his career by teaming up with Nadal would be his dream scenario and that he and the Spaniard had always maintained respect for each other, even as they vied for the biggest trophies in the sport.
"For us as well to go through a career that we both have had and to come out on the other side and being able to have a nice relationship I think is maybe a great message as well to not just tennis but sports and maybe even beyond," he said.
Nadal, meanwhile, said he was looking forward to an "unforgettable" match alongside his Swiss rival.
"One of the most important, if not the most important players in my tennis career is leaving," he said.
"At the end, this moment will be difficult. I'm super-excited and grateful to play with him."
The Laver Cup is a team competition that pits Team Europe against Team World.
The six-strong European team, captained by Bjorn Borg, also includes 21-time major winner Novak Djokovic (35) and three-time major winner Andy Murray (35).
Their opponents, Team World, skippered by John McEnroe, include Taylor Fritz, Felix Auger-Aliassime and Diego Schwartzman.
Italian Matteo Berrettini (26), the first alternate for Europe, will take Federer's place over the weekend.
