Saina, who was the only unseeded woman to enter the last eight after defeating seventh seed Chen Yufei in the opening round, did well to stay within touching distance of the second-seeded Sindhu and finally overtook her in the second game at 14-13.
Saina thrashed her fellow countrywoman Sindhu in straight sets 21-13, 21-19 to enter the semi-final of the Indonesia Masters.
Saina and Sindhu clashed twice in the global circuit so far with both winning once.
However, in the semis, the 27-year-old Saina will take on former World Champion Ratchanok Intanon.
London Games bronze medallist, Saina had, however, upstaged Sindhu to clinch the women's singles title in the Senior National Badminton Championship past year.More news: Focus On Arsenal, Mauricio Pochettino Tells Special Manager Arsene Wenger
More news: Trump's Immigration Plans Include Doubling DACA, Path to Citizenship, $25 Billion Wall
More news: Michigan House Speaker Calls On Entire MSU Board Of Trustees To Resign
Saina staged a brilliant comeback in the second game, to reduce the defecit to 5-9, but Sindhu went into the break with one point (11-10) lead.
Saina took the first game quite comfortably, winning it 21-13.
Overall, Saina Nehwal won 42 of the 74 points played in the match. Saina rallied back in the second game to win the match. Saina then closed out the match even as Sindhu threatened to mount a late challenge towards the dying stages of the match.
In men's doubles, duo of Satwiksairaj Rankireddy and Chirag Shetty defeated Chinese Taipei's Liao Min Chun and Su Ching Heng 21-17, 21-16 to enter the last 16.