The Spanish second seed blunted the serving power of giant Croatian Ivo Karlovic to set up an compelling quarter-final against the fifth seeded Scot on Tuesday.
Murray became the first Briton in 25 years to reach the Australian Open quarters after he defused towering 33rd seeded American John Isner 7-6 (7/4), 6-3, 6-2.
Elsewhere, Del Potro was dumped out in a titanic five-setter to Croatian 14th seed Marin Cilic, who will play American seventh seed Andy Roddick.
Roddick staged a magnificent comeback to overhaul Chile's former finalist and 11th seed Fernando Gonzalez in five sets, 6-3, 3-6, 4-6, 7-5, 6-2.
Nadal tamed the 6ft 10ins (2.08m) Karlovic despite the Croat thumping down 28 aces, eventually winning 6-4, 4-6, 6-4, 6-4.
Nadal, a six-time Grand Slam winner, now faces Murray and has won seven of their nine previous matches.