Mucklow Hill in Halesowen was closed during evening rush-hour traffic on Thursday as dozens of firefighters were called to the scene at around 6pm.
Seven fire engines were involved in putting out the blaze, which has left the building structurally damaged.
Drivers faced heavy delays after being diverted around one of the town’s main commuter roads.
Seven crews attended the fire and some were still at the scene late into the night and this morning.
West Midlands Police and West Midlands Fire Service warned motorists to avoid the A458 route and buses were diverted too, however big queues built up around the site.
Watch commander Thomas Bell, from Woodcote Valley Cross fire station, said: "When we arrived last night, we found a big pile of rubbish that was well alight. The crews' objective was to make a quick extinction and protect the buildings next door.
"I think there was seven fire engines in attendance last night and down to four today. We are formulating a plan to bring the incident to a close shortly, with a relief crew coming in, maintaining the scene throughout the day and then planning to shut it.
"We had crews in attendance from Haden Cross, Woodgate Valley, Tipton and Smethwick and when we got here last night, the whole of the back was well alight and was about 30m by 20m deep.
"The building has been classed now as a derelict shed and they are in the process of clearing the soil to get rid of all the rubbish at the landfill.
"The owner of the site has been notified and has been in attendance, and has gone away to get a digger driver to come back and move a lot of the waste.
"The fire could have been a lot worse if not for the swift action of the fire service as it could spread the bathrooms and interior factories next door."
The cause of the fire is not yet known.
A spokesman for West Midlands Fire Service said: "We were called to an incident at 5.37 yesterday at Mucklow Hill in Halesowen. Initial crews arrived at the incident in under five minutes. The incident was a severe fire involving 100 per cent of a disused factory unit. At the height of the incident, seven fire engines and a hydraulic platform were in attendance. Police and ambulance were also in attendance.
"Good progress has been made overnight and four fire engines and a hydraulic platform remain in attendance damping down and turning over. Crews are expected to be at the incident for the remainder of the day. The incident is expected to scale down further shortly.
"Mucklow Hill remains partially closed, with one lane open to traffic. The cause of the incident is still under investigation."
A nearby worker, who wished to remain anonymous, said: "I was leaving work last night around 6pm and I saw the smoke coming out of the yard.
"I also saw the traffic being held up because they closed off the road.
"It is a little frightening and I've never seen it happen around here before, but I'm glad that it didn't cause more damage than it did."
Jamie Arrowsmith, spokesman for West Midlands Ambulance Service, said: "We were called to reports of a fire on Mucklow Hill at 5.52pm, one ambulance attended the scene.
"However, on arrival it was determined there no patients for us to treat and we were stood down from the scene."