The Vietnamese athlete ranked No 80 in the world, defeated former European champion Blichfeldt, who ranks No 15, with a score of 21-18, 16-21, 21-18 at the Tokyo Metropolitan Gymnasium after 66 minutes on August 24.
Trang matched her best result at the world tournament she made in 2014 and 2019.
It was the second big result that the Rio Olympian Trang has had in Tokyo.
She trounced former SEA Games champion Kisona Selvaduray, world No 54, 21-10, 21-17 in the first round.
Her next rival will be the match winner between No 2 seed Tai Tzu-ying of Chinese Taipei and Martina Repiska of Slovakia.
Trang is one of three Vietnamese athletes at the tournament.
On August 23, Nguyễn Thùy Linh was ousted after losing 21-18, 21-10 to No 3 seed An Se Young of South Korea in the second round.
Earlier, Việt Nam's legend Nguyễn Tiến Minh, the oldest athlete in the tournament, lost 21-8, 21-6 to No 15 seed Wang Tzu Wei of Chinese Taipei in the first round.
More than 380 athletes take part in the championship's five categories. The competition will wrap up on August 28.