Serena Williams thrashed Greta Arn as she moved towards her sixth Melbourne title in ominous fashion, Kei Nishikori made history for Japan and Zheng Jie kept up an impressive performance from China's women.
Men's champion Djokovic happily destroyed injury-hit Nicolas Mahut 6-0, 6-1, 6-1, but he did his best to cheer up the Frenchman on his 30th birthday as he played to the crowd on a bright Saturday in Melbourne.
Mahut, compromised by a left knee injury, maintained his good humour and he shrugged and smiled broadly to fans when he finally won a game at the start of the second set. He was later given a birthday cake by reporters.
"Credit to Nicolas. Obviously, he had some strapping around his knee and I felt sorry for him," said top seed Djokovic, who remains on course for a semi-final with Scotland's Murray.
"Evidently he was not moving well, he was not able to perform his best, but he didn't want to retire and he wanted to stay all the way so I wish him happy birthday."
Later, Murray won an entertaining match with French doubles specialist Michael Llodra 6-4, 6-2, 6-0, which included so many crowd-pleasing rallies and cute volleys that it looked like an exhibition.
"(Coach) Ivan Lendl would have preferred a few more bread and butter points, serve and forehand finish, but that was my style of tennis tonight and I hope everyone enjoyed it," Murray said.
Mahut, who lost the longest match in tennis history at Wimbledon 2010, was not the only injury casualty on day six as Russia's Maria Kirilenko became the second women's retirement in quick succession.
Just hours after Anabel Medina Garrigues agonizingly rolled her ankle against Li Na late on Friday, Kirilenko lasted just one game into the second set against Petra Kvitova before retiring with a thigh problem.
Williams showed no signs of her recent ankle sprain as she thumped Hungary's Arn for the loss of just two games, and Serbia's Ana Ivanovic set up a fourth round match with Wimbledon champion Kvitova.
Maria Sharapova, who lifted the women's trophy four years ago, won 6-1, 6-2 against Angelique Kerber and will next play Germany's Sabine Lisicki.
But former world number two Vera Zvonareva departed in tears after she was shocked by 56th-ranked fellow Russian Ekaterina Makarova. China's Zheng also upset French number one Marion Bartoli to join compatriot Li Na in round four.
Former finalist Jo-Wilfried Tsonga blazed through for the loss of just six games against Portugal's Frederico Gil, but Gael Monfils was ousted in five sets after an injury-hit struggle with Kazakhstan's Mikhail Kukushkin.
Fellow Frenchman Richard Gasquet also reached the fourth round and Spain's David Ferrer came through in three sets against Juan Ignacio Chela.
Nishikori, 22, beat France's Julien Benneteau in four sets to become the first Japanese man to reach the Australian Open round of 16 in the open era.
Meanwhile there were more fireworks as David Nalbandian hit out against his hefty US$8,000 fine for splashing water at an official following his stormy exit in the second round.
Nalbandian vehemently denied any wrongdoing, saying he was simply washing his hands in doping control, following an angry on-court confrontation over a rejected Hawk-Eye call in this week's loss to John Isner.
"Two injustices -- one inside and another one outside the court. I am going to appeal the sanction," he tweeted.
The Nalbandian row was another bad-tempered episode after Marcos Baghdatis mangled four racquets in a display of unbridled frustration which went viral on the Internet, and earned him a US$1,250 fine.