Denmark overcame tricky home conditions to beat the hosts by 33 runs in a low-scoring contest at UKM Oval.
Zameer Khan top scored with 44 in the Danes total of 179, with Man of the Match Hamid Shah (37) and Mads Henriksen (32) making what were to prove vital contributions.
Pavandeep Singh (3-24) and Muhammad Wafiq (3-32) took three wickets apiece for Malaysia.
A superbly disciplined bowling display, backed up by a titanic efford on the field ensured that Malaysia's reply never gained any momentum.
Basir Shah (3-24), Hamid Shah (2-18), Nicolaj Laegsgaard (2-23), and Saif Ahmad( 2-37) were all among the wickets in the 33-run win, which takes them close to guaranteed promotion.
"I'm delighted with the win especially considering the spin friendly wicket and uneveness of the pitch," said Denmark Head Coach Jeremy Bray afterwards. "The pitch definitely suited the Malaysian team.
"I am certain they were surprised how well we played their predominantly spin-based attack.
"The game ebbed and flowed during their batting innings. 179 on that wicket was a very tough ask and we seemed to get wickets at crucial times.
"Even though there is still a lot of cricket to be played in this tournament, I am extremely proud of how well the side played today to beat a strong Malaysian team in conditions that favoured them massively."
Denmark play Uganda on Thursday at Kinrara Oval.
Denmark v Malaysia at UKM Cricket Oval.
Denmark won by 33 runs
Denmark 179 (49 overs) Zameer Khan 44, H Shah 37, M Henriksen 32; Pavandeep Singh 3-24, Muhammad Wafiq 3-32
Malaysia 146 (45.3 overs) Muhamad Syahadat 29; Basir Shah 3-24, HAM Shah 2-18, ND Laegsgaard 2-23, SA Ahmad 2-37