The Belarusian fifth seed blew away 26th-seeded Elise Mertens 6-2, 6-3 to set up a clash with Olympic champion Belinda Bencic.
Thirtieth seed Karolina Pliskova and 23rd seed Zhang Shuai also went through in straight sets on day six at Melbourne Park, and will clash in the fourth round.
Sabalenka is building a head of steam in her pursuit of a first Grand Slam title.
The Minsk-born 24-year-old teased the Margaret Court Arena crowd for supporting Belgium's Mertens over her, but said she was enjoying the ride into the second week.
Sabalenka is trying not to get carried away.
"About the favourite, that I am on that favourite list... I mean, it's really good that I'm there," said the Belarusian, who is yet to drop a set.
"But I better focus on myself, on my game, make sure that my dream will happen."
Bencic has also not dropped a set in Melbourne. The Swiss 12th seed eased past unseeded Italian Camila Giorgi 6-2, 7-5.
"Sabalenka is a very aggressive player, has a lot of power," said Bencic, herself a big server and hard hitter.
Pliskova, the former world number one from the Czech Republic, defeated Varvara Gracheva of Russia 6-4, 6-2.
She faces China's Zhang, a 6-3, 6-2 victor over Katie Volynets of the United States.
Also into the fourth round is the 17-year-old Linda Fruhvirtova, who beat her fellow Czech Marketa Vondrousova in three sets. She faces Donna Vekic of Croatia.
- Banana boost -
In the men's draw, fifth seed Andrey Rublev surged into a last-16 clash with Holger Rune -- then thanked his beaten opponent Dan Evans for giving him a banana mid-match.
The Russian crushed the Briton 6-4, 6-2, 6-3 to make the fourth round for a third time.
He will face Danish teenager Rune for a place in the quarter-finals after the ninth seed survived a nasty fall to sweep past unseeded Frenchman Ugo Humbert 6-4, 6-2, 7-6 (7/5).
Friend and 25th seed Evans threw a banana to Rublev at a changeover when he ran out.
"I didn't ask him, I asked the ball boy, but Danny asked for bananas earlier and he had two so he just said 'take it', and I caught it," said Rublev.
"He helped me with some energy, for sure," he joked.
Also through is Alex De Minaur after the Australian 22nd seed saw off Benjamin Bonzi of France 7-6 (7/0), 6-2, 6-1.
In two all-American matches, Jeffrey Wolf strolled past Michael Mmoh in three sets while Tommy Paul made equally light work of Jenson Brooksby.
Andy Murray and Novak Djokovic will have to rev their bodies into action later on Saturday when both attempt to reach the fourth round.
It remains to be seen how much the 35-year-old Murray has left in the tank after he made round three by winning a five-set marathon that ended at 4:05 am on Friday.
The unseeded former world number one, who also played five sets in his opener at Melbourne Park, will need to defy tiredness and his metal hip against 24th seed Roberto Bautista Agut.
Murray's old rival Djokovic is clear favourite to win the Australian Open for a record-tying 22nd Grand Slam, but there are concerns about his left hamstring.
The Serb faces a potentially tricky test against 27th seed Grigor Dimitrov.
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