The Spanish tennis great had shown signs of a return to form in Scandinavia as he made an impressive run to the final, just one week before tennis at the Olympic Games gets underway on the clay in Paris.
But Nadal, rather than celebrating his 64th title on the surface and first since Roland Garros 2022, was dominated by seventh seed Borges as he struggled to find fluency with his serve and ground strokes.
"Many congratulations to Nuno," said Nadal.
"You've been playing great during the whole week, so you deserve it more than anyone else here. Congratulations and enjoy your moment, it's always special winning a title."
"Today wasn't my best day, but all the credit to Nuno. He played very well and it was so difficult for me, so well done."
Borges was the first to make headway in the match when he broke the Spaniard's serve to go 3-1 up, with Nadal saving break points before overcooking a forehand down the line.
But the 14-time French Open winner struck back immediately on the Borges serve, earning two break-back points before the Portuguese dumped a forehand into the net from inside the service box.
But neither player could quite grab the ascendancy in the first set as Borges quickly ran up a 0-40 lead in the next service game, converting his second break point with a perfectly executed drop shot.
Nadal was struggling to find his first serve but managed to hold just his second service game of the opening set to force Borges to serve one more time. The world number 51 kept his nerve to do just that.
The 38-year-old showed signs of his old self serving at deuce in the first game of the second set with a booming forehand winner down the line, before he eventually held but that was one of the few highlights for Nadal on the day.
Borges then struck at 2-2 as he broke Nadal's serve for the first time in the second set and fourth time overall to edge ahead.
The 27-year-old followed it up by winning the next three games, sealing a maiden career title in his first-ever match-up against the former world number one with an ace.
"I don't know what to say. I think I was wishing for this moment for a while already," said Borges in his post-match interview.
"It's crazy, in tennis it doesn't happen when you expect it sometimes. I know we all wanted Rafa to win, a part of me wished that too, but something even bigger inside of me really pushed through today... I'm just really happy overall. I really don't know what to say, I'm very emotional."
