The World No.1 triumphed 6-1, 6-1 to book a meeting with Svetlana Kuznetsova, who knocked out 10th seed and former World No.1 Caroline Wozniacki, reports Xinhua.
The top-seeded Belarusian lost her serve in the opening game of the second set but she still strolled through in 57 minutes.
Azarenka had become the first of the top four seeds to drop a set at Melbourne Park this year in the third round against an injury-hampered Jamie Hampton.
Azarenka, who beat Maria Sharapova in last year's final, needs to win again to have any chance of remaining World No.1 with Sharapova and Serena Williams breathing down her neck.
"The top battles are starting now. I'm really excited to be so far in the tournament again," she said.
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Two-time Grand Slam winner Kuznetsova outlasted the Dane 6-2, 2-6, 7-5. The unseeded Russian, the lowest ranked player left in the tournament, showed she was free of the leg injury that ruined her 2012 season.
The former US and French Open winner started strongly against Wozniacki, sealing an early service break in the first set and taking it 6-2 in 43 minutes.
Wozniacki was quick to respond levelling the scores before the pair fought to 5-5 in the deciding set.
The Russian dominated the 12th game and wasted no time in clinching the victory after running up two match points against Wozniacki.
Kuznetsova had lost to Wozniacki four times in succession before her return from injury this year but beat the former World No.1 for the first time since 2009 in the recent Sydney International.
Wozniacki reached the semifinal in Melbourne in 2011 and made it to the quarters last year but was unable to equal her accomplishments from the previous two years.