After two scrappy wins to kick-start her campaign at Melbourne Park, the Romanian produced a majestic display to claim a 6-2 6-3 victory at Margaret Court Arena.
"It was a great match - my best match here this year," Halep said. "It is always a big challenge to play against the Williams sisters so I was super motivated."
Seven-time Australian Open champion Serena booked a last-16 spot by thrashing Ukrainian Dayana Yastremska 6-2 6-1.
In the men's draw, a lapse in concentration led to top seed Novak Djokovic dropping his first set of the week but he regrouped to stave off the challenge of Canadian Denis Shapovalov in a 6-3 6-4 4-6 6-0 victory.
The 31-year-old Serb will meet Russian 15th seed Daniil Medvedev in the last 16.