Fognini secured the victory in just 69 minutes as he capitalised on five of his eight break point opportunities to set up the daunting match-up with the Spanish clay-court king.
Nadal, fresh from his triumph at the Madrid Masters, has already laid down his marker ahead of the French Open at Roland Garros, where he will be the favourite to defend his title.
Fognini, who has now reeled off three successive victories over his compatriot Seppi on clay, has yet to face Nadal on the ATP Tour.
Rome Masters results
Philipp Kohlschreiber (Germany) beat 14-Milos Raonic (Canada) 7-6(2) 6-4
Albert Montanes (Spain) beat Martin Klizan (Slovakia) 3-6 7-5 6-3
Jerzy Janowicz (Poland) beat Santiago Giraldo (Colombia) 7-5 6-2
Ernests Gulbis (Latvia) beat Jarkko Nieminen (Finland) 6-2 7-6(6)
11-Marin Cilic (Croatia) beat Andrey Golubev (Kazakhstan) 6-4 6-2
Potito Starace (Italy) beat Radek Stepanek (Czech Republic) 4-6 6-4 6-3
Andrey Kuznetsov (Russia) beat Xavier Malisse (Belgium) 6-2 3-1 (Malisse retired)
Benoit Paire (France) beat Juan Monaco (Argentina) 7-6(4) 1-6 6-4
Albert Ramos (Spain) beat Jan Hajek (Czech Republic) 7-5 6-0
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- Milos Raonic