Ten crews were last night sent to the blaze at Reaymer Close, Beechdale, which began around 6pm.
Firefighters were taking water from the canal as they tackled the blaze.
A spokesman for West Midlands Fire Service confirmed that it still had crews dealing with the fire this morning, which is still burning. However the incident has been scaled back from last night.
The cul-de-sac is home to Leamore Enterprise Park and consists of several mixed-use units.
Huge plumes of smoke have been seen billowing from the estate and it is understood high-rise platforms have been brought in to assist firefighters on the ground.
Group Commander Martin Ward-White, said: “West Midlands Fire Service are dealing with a large fire in a recycling plant on Reaymer Close, Walsall.
“Currently we have 10 appliances in attendance along with colleagues from ambulance, local authority, the environment agency and other agencies.
“Assertive fire-fighting actions are being undertaken to extinguish the fire.
“While fire-fighting is taking place overnight we would advise local residents to close windows due to smoke plume.
“We are mitigating the impact on the local area and are working to bring this incident to a close in a timely manner and thank local residents for their cooperation at this time.
“There have been no reported injuries at this time.”
Several ambulances were also at the estate.