Qualifier Dayana Yastremska ousts Azarenka to reach Australian Open quarters
Yastremska fought off two set points in the first set and came from a break down in the second against the former world number one to win 7-6 (8-6), 6-4 on Rod Laver Court.
Her reward is a clash with unseeded Czech Linda Noskova, who progressed to the last eight when Ukraine's Elina Svitolina retired with a bad back while trailing 3-0 in the first set.
"I need to take a little bit of time to breathe because my heart I feel is going to jump out of my body," said Yastremska, who hammered Wimbledon champion Marketa Vondrousova in the first round.
"I always felt like I was running behind the train, but I think because I am a little bit of a fighter that's why I won this match."
Noskova, 19, barely broke a sweat to progress after former world number three Svitolina was unable to complete her match on Margaret Court Arena.
The 19th seed needed a medical timeout at 2-0 down in the first set, during which she received treatment for her lower back, and she pulled out after being broken for the second time on her return.
"I got a spasm, or I don't know exactly what it is, but like shooting pain in the first game, the last two points," she said. "Couldn't do anything, completely locked my back."
Noskova, ranked 50 in the world, is enjoying a breakout tournament, including a stunning win against world number one Iga Swiatek in the third round.
'Feeling great'
Spanish second seed Alcaraz, headlining the evening action at Melbourne Park, has yet to be fully tested but has shown glimpses of his best form.
Speaking after Saturday's third-round match, when Chinese teenager Shang Juncheng was forced to retire, trailing by two sets, Alcaraz said he was "feeling great".
"Probably seven, eight (out of ten)," said the 20-year-old, giving himself marks. "It's a high note. But that's how I feel.
"I think I'm improving every day. Every match that I'm playing, I'm feeling better and better. Moving, hitting the ball, and, of course I'm getting used to this court as well."
The Australian Open is doubling up as a shootout for the number one spot and defending champion Novak Djokovic has already laid down a marker, dropping just three games in his fourth-round match on Sunday.
Two-time Grand Slam winner Alcaraz knows he will have to raise his game to new heights to stop the top seed winning a record 25th Grand Slam title in Melbourne, where the Spaniard's previous best run was the third round.
German sixth seed Alexander Zverev takes on Britain's 19th-seeded Cameron Norrie in a match that could go the distance while third seed Daniil Medvedev faces Portugal's Nuno Borges, ranked 69.
On the women's side, China's 12th seed Zheng Qinwen meets Oceane Dodin of France.