In a tight first set filled with high-quality rallies, both players persisted to hold the serve until Raonic, leading 5-4 at the time, managed to secure the crucial break to open up a lead against the world number one.
The disappointment in the opener forced Nadal into action, and the Spaniard proved to be strong in the opening stages of the second set as he stormed into a 3-0 lead thanks to two breaks of serve.
Nadal had started to find his fluency on serve, while Raonic was forced to battle from falling further behind in the set, but the Canadian was unable to prevent his rival from drawing level with a 6-2 success.
Raonic saved a break point in the opening game of the decider, but his serve, usually his biggest weapon, was failing to cause the problems it does on a regular basis for players on the tour.
Nadal did find the crucial break of serve in the seventh game of the set, and he comfortably served out to earn a spot in the final four of the tournament.