The Spaniard seemed to have the second set in hand, building a 5-3 lead, but Blake broke twice to force the tiebreak.
The two battled evenly in the third set until Nadal broke Blake in the eighth game, finally prevailing when Blake's return on match point hit the net.
Both men recorded six aces and two double faults in an entertaining 2 hour, 24 minute match that featured numerous sharply angled exchanges at the net.
Earlier in the day, Ivan Ljubicic of Croatia defeated Poland's Lukasz Kubot 7-6 (6), 4-6, 6-4 to also reach the quarter-finals.
Later on Thursday 2004 China Open champion Marat Safin of Russia was to play Chile's Fernando Gonzalez, while Tommy Robredo of Spain was to face Sweden's Robin Soderling.
In the women's event, Marion Bartoli of France defeated China's Zhang Shuai 6-1, 6-4 to reach the quarter-finals.
Serena Williams, who reclaimed her No. 1 ranking on Tuesday, was to face Russia's Nadia Petrova later on Thursday, while Poland's Agnieszka Radwanska plays Maria Jose Martinez Sanchez of Spain and Italy's Flavia Pennetta meets Russian Vera Zvonareva.