To climb back to the top at the age of 36, the Swiss must at least reach the semi-finals.
If seedings hold up, that means he would have to defeat compatriot and friend Stan Wawrinka in what would be a high-profile quarter-final.
"I would love to be in that position with anyone, but with Stan it would be like a Grand Slam final, a big-time match," said Federer, fresh from winning a 20th Grand Slam title at the Australian Open. "I'm hoping to get to number one and hoping to do it this week. You always want to do it the tough way, it's not easy to get there. The achievement would be quite incredible. It's exciting to see Stan in my section and it's great to have him back [after knee surgery in July]."
Federer made a relatively late decision to play at the event, which he won in 2005 and 2012.
He said that after winning in Melbourne a fortnight ago, he felt good enough to compete this week and is also considering playing in Dubai in two weeks' time.
"I didn't expect to win Australia, I played it not thinking about number one," he said. "I didn't think of the rankings at all in Melbourne. Afterwards, I thought I could always play Rotterdam, I'd love to play, give it a go and see what happens. I'm happy I'm here, healthy and eager to play.”
He starts his bid on Wednesday against Belgian Ruben Bemelmans.
Federer also gave some insight into his plans for the spring claycourt season, which he skipped completely last year on the way to winning his eighth Wimbledon title.
"The clay season is up in the air. If I'm playing a lot during this part of the season, it would be hard to play a robust clay season. It would be light [schedule] if I do play," he said. “We'll see how it goes, I'm healthy and glad to be playing. I should be playing when I feel that way and not play when I don't feel at 100% or don't feel ready to do it. That's the secret for me moving forward."
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