Nadal cruised into the quarterfinals with a 6-4, 6-4, 6-2 win over fellow Spaniard Feliciano Lopez.
The second-seeded Nadal, who is on a collision course with Federer for a possible semifinal matchup, moved to 9-2 all-time against Lopez and moved to the round-of-eight Down Under for a sixth straight year.
The last time Nadal lost before the quarterfinals at a Grand Slam was at the 2009 French Open.
"I am improving day by day," Nadal said. "But this time I felt that the first day I played well, and second, two days ago I played well. And today I played another complete match in my opinion, serious match."
Lopez, seeded 18th, is the only left-handed player to have defeated Nadal on two occasions, but he has never even won a set against his Davis Cup teammate on a hard court surface. Since the start of 2010, only three different men have defeated Nadal in Grand Slam play - Novak Djokovic (twice), David Ferrer and Andy Murray (once each).
Nadal, bidding to win his second Australian Open title (2009) and his 11th Grand Slam championship, will face No. 7 seed Tomas Berdych, who downed No. 10 seeded Spaniard Nicolas Almagro, 4-6, 7-6 (7-5), 7-6 (7-3), 7-6 (7-2).
That was a contentious match, especially at the end when Berdych refused to shake Almagro's hand. During the match, Almagro raced for a return and sent a rocket right off the right arm of Berdych, who clearly didn't like being hit.
He said so during an interview after the near four-hour match.
"When somebody wants to hit you straight in your face, I don't see this as a nice moment, especially when you have the whole court free," Berdych said.
It's a good bet Nadal will advance past Berdych as he owns a 10-3 mark against the Czech.
A third-seeded Federer, meanwhile, reached his 31st consecutive Grand Slam quarterfinal with a 6-4, 6-2, 6-2 victory over Aussie sensation Bernard Tomic.
"Maybe the score suggested differently, but I thought we had a lot of long games, tough points, and I thought he did actually really well," said Federer, a four-time winner in Melbourne, who has won 20 of his last 21 matches against Australian opponents and ended the dream for the 19-year-old Tomic.
The 11th-seeded Del Potro also reached the quarterfinals here as the No. 8 seed in 2009, where he suffered his worst Grand Slam defeat to date in a loss to Federer, winning just three games that entire match. He got a bit of revenge later in the year, beating Federer in the final of the U.S. Open.
The fourth round will conclude Monday with matches featuring Djokovic, the top seed, Murray, Ferrer and Jo-Wilfried Tsonga.
Djokovic will battle Aussie veteran Lleyton Hewitt, while the fourth-seeded Murray will meet Kasakhstan's Mikhail Kukushkin. Murray lost to Djokovic in last year's final and was also the runner-up to Federer two years ago.