US Open champion Dominic Thiem became the first major men's casualty of the Australian Open on Sunday, as Naomi Osaka and Serena Williams survived scares to reach the quarter-finals.

A fatigued-looking Thiem, coming off a five-set win over Australia's Nick Kyrgios, slumped in straight sets to Bulgaria's Grigor Dimitrov who took it 6-4, 6-4, 6-0 in just over two hours.

Dimitrov's victory against Thiem, the third seed and last year's runner-up, sets up a quarter-final with surprise package Aslan Karatsev, who is into the last eight on his Grand Slam debut.

"Whether it's a fairytale or not, it's a match and you've got to be ready," Bulgaria's Dimitrov said of the unheralded Russian.

"I've seen a little bit of his matches, clearly he's a dangerous player."

Earlier, Japan's Osaka edged a thriller with fellow major-winner Garbine Muguruza and Williams came through a physical test against Aryna Sabalenka to maintain her bid for a record-equalling 24th Grand Slam title.

Karatsev beat Canada's Felix Auger-Aliassime, and Taiwan's Hsieh Su-wei, 35, reached the last eight for the first time after 16 years of trying.

Later, all eyes will be on whether eight-time winner Novak Djokovic can recover from a serious abdominal injury in time for his night match with Milos Raonic, last up on Rod Laver Arena.

Second seed Simona Halep will also be looking for revenge against Polish teenager Iga Swiatek, who beat the Romanian easily on the way to a maiden Grand Slam title at Roland Garros last year.

- 'Teeing off on every shot' -

In an empty Rod Laver Arena, with fans barred on the second day of a five-day, state-wide coronavirus lockdown, Osaka was on the verge of elimination at 3-5, 15-40 on her serve in the third set.

But the three-time major champion rattled off four points in a row and then twice broke Muguruza's serve to prevail 4-6, 6-4, 7-5. 

"I felt like I was intimidated because she was playing so well," said Osaka, after her first meeting with last year's beaten finalist.

"On the stressful points, I had to play within myself."  

Williams, 39, was also meeting Sabalenka for the first time and she had to weather an onslaught from the Belarusian to reach the last eight 6-4, 2-6, 6-4.

"I knew it wasn't going to be easy, she was teeing off on every shot," said the American, who was on upset alert before rallying to take a tight third set.

Elsewhere Taiwan's Hsieh became the oldest player to make a last-eight debut in the Open era after winning 6-4, 6-2 against Czech Marketa Vondrousova, who is 14 years her junior. Hsieh's reward is an all-Asian quarter-final against Osaka on Tuesday.

Karatsev also claimed a slice of history as he became the first player in 25 years to reach a Grand Slam quarter-final on debut, stunning 20th seed Auger-Aliassime in five sets.

The 27-year-old, a virtual unknown before the tournament started, battled back from two sets down to upset the Canadian 3-6, 1-6, 6-3, 6-3, 6-4.

Djokovic has been given the maximum amount of time to recover from a midriff muscle tear that left him grimacing during his attritional, five-set win over American Taylor Fritz late on Friday.

Djokovic, who chose not to practise on Saturday to seek medical advice and treatment, said he couldn't guarantee he'd be able to face Raonic in the late match.

Swiatek, 19, will open the night session against Halep, after hammering the two-time Grand Slam champion for the loss of just three games in the French Open's last 16.