The 22-year-old Saina was trailing 18-21, 0-1 in the high-voltage bronze medal play-off match when her second seeded opponent Xin Wang retired hurt, giving India an unexpected medal without having to sweat much.
Saina also became the second Indian woman to win an Olympic medal, after Karnam Malleswari's weightlifting bronze in 2000 Sydney Olympics.
With the addition of Saina's bronze, India's medal collection in the ongoing Olympics has gone upto three with pistol shooter Vijay Kumar (silver) and seasoned marksman Gagan Narang (bronze) being the other medal winners.
The packed Wembly arena, which had a seizable chunk of vociferous Indian supporters cheering for Saina, were taken by surprise when the script suddenly changed with Wang getting injured towards the very end of the first game.
Wang got herself medical attention and even went in for the second game but conceded the match after just one point. A thunderous roar greeted Saina when it was announced that she had won the bronze medal and Wang had retired.
"I still can't believe that I have won a medal. In badminton, I never believed that India could win a medal because the competition is so tough. It is a dream come true for me," Saina said after the match.
"I had trained hard and there was a lot of expectation. I initially thought that she was just taking rest as she was tiring, but then I realised she was injured. It's sad that she got injured, but I was confident of beating her as I was coming into rhythm," she said.