Daniell and his British partner Dominic Inglot have beaten the unseeded Chilean-Belarussian combination of Hans Podlipnik-Castillo and Andrei Vasilevski 6-4 6-3 in 1hr7min.
The match was played on show court 2 with a noisy Kiwi contingent among the crowd. It was a relatively tight first set with games going to serve until the 10th game when Daniell and Inglot broke Vasilevski's serve with a couple of scintillating passing shots to clinch the set.
Daniell and Inglot never faced a break point on serve and won 32 points to 22 in the opening set which lasted 33 minutes.
The second set was tighter with Daniell and Inglot taken to deuce once on serve but creating break point chances against their opponents. Daniell got the decisive break in the 8th game with a forehand passing shot and then calmly served out the match. They won 30 points to 22 in the second set with the difference being their serving, getting 76% of first serves in and never once facing a break point in the match.
The result has bettered the 28 year old from Masterton's previous best Grand Slam result achieved at last year's Australian Open and at the 2016 French Open and 2016 US Open.
Regardless how far Daniell goes from here, he will rise to a career high doubles ranking close to the world's top 30. It will enable him to go close to getting direct entry into the prestigious Masters 1000 tournaments in Indian Wells and Miami in March.
For making the quarter finals Daniell and Inglot will split $90,000 AUS ($99,000 NZ) if they don't go any further.
In the quarter finals they will face the on-form ASB Classic champions Austrian Oliver Marach and Croatian Mate Pavic, the 7th seeds.
Otago doubles tennis player Ben McLachlan has also made it through to the quarterfinals of the Australian Open men's doubles competition.
McLachlan, who is from Queenstown, changed his sporting nationality to Japan to further his tennis career.
McLachlan and his partner, German Jan-Lennard Struff, will take on the pairing of Pole Lukasz Kubot and Brazilian Marcelo Melo in the next round.
Should both McLachlan and Daniell win their matches, they would then go on to face each other in the semifinals.
Meanwhile Kiwi Davis Cup player Rubin Statham has been beaten in the second round of qualifying at the US150, 000 Newport Challenger tournament in the US. New Zealand's top ranked singles player has lost 4-6, 7-6 (3) 6-3 to American Marcus Giron.
