Top-ranked Murray needed 3 hours, 20 minutes to separate himself from Nishikori. The first set alone took 85 minutes.
It is the first time since the tournament moved to the O2 Arena in 2009 that Murray has won both of his opening two group matches, and he is in pole position to reach the semifinals for the first time in four years.
That could come later Wednesday if Marin Cilic defeats Stan Wawrinka.
Novak Djokovic is already through, and defeat against Nishikori would have hurt Murray’s chances of holding onto top spot in the rankings.
The Scot, who was given another standing ovation when he walked on court, said: “Kei was making me run a lot, he was dictating a bunch of the points. I managed to get enough breaks to win it.
“That’s what you work for, is these moments in places like this. It was an amazing atmosphere.
“I feel OK right now. It’s normally the next day when you feel stiff and sore, but there’s hopefully three days left in the season and I’ll give my best to get through as many matches as I can.”
For all of Murray’s achievements this year, this was the first time he played a top-five opponent since June, when he lost to Djokovic in the French Open final.
Nishikori was one of only three players to beat him in the intervening five months, edging a five-setter in the U.S. Open quarterfinals.
Nishikori also won their only previous meeting here two years ago, and was impressive in beating an albeit lackluster Wawrinka on Monday.
But he had to save a set point at 6-5 down, and needed five set points to take the opener on a wide forehand by Murray.
Murray immediately broke to start the second. Nishikori tied it at 4-4. But Murray broke straight back, and had to save two set points to force a decider.
Murray has played more matches than ever this season and he looked drained, but Nishikori’s decision-making was clouded by fatigue, and lost his serve in the third game.
When a double fault made it 4-1 to Murray, the top seed finally had some breathing space and the end was in sight.
Nishikori showed commendable resolve to retrieve one break, but Murray served out at the second time of asking.
Watch ATP Tour Finals live on Tennis Channel