The club-mates along with American basketball star Kobe Bryant make for three nominees from team sports -- the first time ever for the awards.
Argentine forward Messi struggled for goals at last year's World Cup but has been in red-hot form for Barcelona and managed to pip Iniesta, the inspiring Spanish mid-fielder who was instrumental in clinching his team its maiden World Cup title, for the FIFA World Footballer of the Year honour.
Nadal, who is currently out of action due to injury, is another strong contender for the award, the nominees for which also include Filipino boxing star Manny Pacquiao, first boxer to win world titles in eight different divisions, and the youngest winner of the Formula One World Championship, Sebastian Vettel.
Should Nadal manage to turn the spotlight away from Messi and Iniesta and impress the 46-strong jury of former top athletes such as Franz Beckenbauer, swimming legend Mark Spitz and former cricketer Steve Waugh among others, the Spaniard would fetch his second Laureus trophy after 2006.
For the World Sportswoman of the year, three-time winner Serena Williams is nominated once again after winning two Grand Slam titles in 2010. Also on the short-list are Belgian ace Kim Clijsters and Denmark's world No 1 Caroline Wozniacki.
American ski star Lindsey Vonn and athletes Jessica Ennis of Britain and Croatian high jump sensation Blanka Vlasic are also in the list of nominees.
The Laureus World Team of the Year category nominees feature Spain's World Cup winning team along with the European Ryder Cup Team, Champions League winners Inter Milan, NBA winners Los Angeles Lakers, the Red Bull Formula One Team and the New Zealand All Blacks rugby team.
In the Comeback of the Year category, Belgian tennis star Justine Henin, Italian motor cycle racer Valentino Rossi have been nominated along with American golfer Paula Creamer, track star Tyson Gay and former Jamaican athlete Merlene Ottey, who now runs for Slovenia.
The awards would be hosted by Hollywood star Kevin Spacey and those attending include legendary actor Morgan Freeman, former tennis ace Boris Becker and former star gymnast Nadia Comaneci.