The Olympic bronze medallist advanced to the semifinal when she staved off the challenge from local favourite Kristy Gilmour to assure herself of at least a bronze.
The 27-year-old Indian, who won a silver medal at the last edition at Jakarta, dug deep into her reservoir to eke out a 21-19 18-21 21-15 win over the world No. 31 Gilmour in a match that lasted an hour and 14 minutes.
With Rio Olympics silver medallist P V Sindhu already making it to the semifinals from the top half, this is the first time India will return with two medals from the BWF World Championships.
"I was expecting a tough fight, but I was surprised she was playing so quick," said Nehwal after the match.
"There were a lot of difficult rallies. She was pepped up and motivated, she put up a great show. I didn't expect she would last so long in the third game."
The London Olympics bronze medallist will next play seventh seed Nozomi Okuhara of Japan, who knocked out two-time defending champion Spain's Carolina Marin 21-18 14-21 21-15 in another quarterfinal match.
Saina's second world championship semifinal appearance is different because she had struggled on court after returning from a career-threatening knee injury and a surgery that affected her at Olympics last year.
Saina had come into the match with a 4-0 head-to-head record against the 23-year-old Scottish but she didn't play her in the last three years. During this time, Gilmour had won two silver medals at the European Championship and it was evident from her fighting spirit.
Saina had opened up a 6-2 lead but Gilmour managed to claw back. It was a jump smash that helped her to draw parity at 8-8 and she soon moved into the break with a 11-8 lead after setting it up beautifully with her angled strokes.
Saina seemed to lack the length in her returns which could put her rival out of position and she looked frustrated as Gilmour dictated the turns with her repertoire of strokes.
At 8-14, the Indian won a couple of points when Gilmour hit wide and at the net. A precise down-the-line smash and then Gilmour slipping during a rally meant Saina had reduced the margin to 12-14.
Gilmour mixed delayed strokes with deceptive angles and varying pace to set up her points. It worked as she led 17-13.
Saina managed to come back at 16-17 when Gilmour produced an onrushing return to break the momentum. The scot made some errors, hitting the shuttle out to allow Saina level par at 18-18.
A good serve gave Saina another point as she moved to game point when her rival made an error in judgement at backline and the experienced Indian sealed it when the Scot found the net.
In the second game, Gilmour struggled with the length as few of her lifts went long but Saina was also erratic, allowing Gilmour to lead 6-4 at one stage. The Indian then caught her rival at the forecourt to draw parity at 6-6.
However, Gilmour once again had the bragging rights at the break as she took a 11-9 lead. The Scot tried to draw Saina forward and follow it up with a fast-paced return and it helped as she led 17-11.
The Scot constructed rallies well but she made many unforced errors, helping Saina make it 16-19. Just then Gilmour produced a jump smash to move to game point but the experienced Saina played the right net shot to gain another point.
Gilmour found the net again but another tricky play during the rally helped her to roar back into the contest when the Indian hit the net.
In the decider, Saina dominated the nets to lead 3-0.
Gilmour failed to kill the rallies and faltered with her forehand turns.
Saina grabbed the opportunity to set up the rallies and moved to 8-3, before grabbing a 11-5 lead at the mid-game interval. She was helped by the Scot's unforced errors.
Gilmour produced another towering cross smash and then triggered one at Saina's body to gain a couple of points. But Saina made some good judgements to move to 14-8.
The Indian gave her everything to dominate the rallies and mixed her strokes. But Gilmour was always lurking behind with her equally lethal deceptions and strokeplay.
However, the Scot looked sluggish with her movement sometimes and her unforced errors kept coming back to haunt her as the Indian eventually grabbed seven match points with a brilliant return.
Gilmour refused to give up and saved a couple of match points but the Indian sealed the issue when Gilmour hit the net.