"I'd put Nadal number one, Federer number two," the eight-time Grand Slam-winner told Singapore's Straits Times in an interview.
"Federer separated himself from the field for four years. He separated himself from (Andy) Roddick and (Lleyton) Hewitt," Agassi added.
"Nadal had to deal with Federer, (Novak) Djokovic, (Andy) Murray in the golden age of tennis. He has done what he has done and he's not done yet."
Conventional wisdom ranks Federer ahead of Nadal, as the Swiss holds a record 17 Grand Slam titles against 13 for the current world number one.
But Nadal has a convincing 23-10 head-to-head record against Federer and is one Australian Open victory away from becoming only the third man to win all four Grand Slam titles twice.
"He has won multiple (majors), every single one (more than once) except the Australian Open -- and give him another year on that," Agassi said.
"It's just remarkable to me what he has done, and he has done it all during Federer's prime."
Agassi added that he did not discount Australia's Rod Laver, two-time winner of the calendar-year Grand Slam, when rating the greatest player of all time.