
The Swiss world number one reacted in a decisive manner two days after losing his first-ever match in the round-robin stage of a year-end event when he was beaten by Fernando Gonzalez.
With victory in just under 90 minutes, Federer's bid for a fourth trophy in five year-end editions remains narrowly on track while Davydenko exits contention after two group defeats.
Andy Roddick was taking on Gonzalez in what promised to be a duel of cannon forehands.
Federer will need to tighten his game before his last group match on Friday after committing 39 unforced errors against Davydenko on the way to victory, to stand 16-1 in Masters Cup group play in his career.
The Swiss defending champion lifted his level in the second set after going up a break in the first for 5-3 only to lose the edge.
He still served out the opener after 39 minutes as Davydenko contributed a double-fault to yield the set point which Federer converted.
In the second set, Davydenko, under a cloud for a a suspicious summer loss now under investigation for the huge amount of online betting it engendered, fought through to hold 1-1 with a 12-minute game.
Federer took 5-1 command after another Davydenko double-fault, but the Swiss was against unable to move in for the kill against a man he had beaten ten times.
The Swiss let it slip to 5-2 as he lost serve to love, with the Russian following for 3-5.
But Federer slammed the lid on the Davydenko season as he claimed victory on first match point, letting out an enthusiastic "yes" as the Russian's forehand return sailed over the baseline.