The German tennis star defeats former tournament champion Maria Sharapova in the third round.
This was Sharapova's first appearance at the Australian Open since 2016, when she tested positive for meldonium and later was handed a 15-month ban.
Kerber, who joined Sharapova in the 30-something club on Thursday, beat absent reigning champion Serena Williams to win the 2016 Australian Open and is a formidable opponent when at her best.
Keys missed last year's Australian Open after undergoing surgery to fix her injured left wrist.
"I have so many great memories from this court (Rod Laver Arena)", Kerber, the 2016 Australian Open champion, said.
Halep has been travelling under the radar somewhat at Melbourne Park as she works her way towards a maiden Grand Slam title. "But looking at the overall picture, the overall beginning of this year, finishing the tournament, the first thing is that I'm healthy".
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But her first serve was a liability on Saturday night, when she put just 38 percent into play. "I will try to continue my run and playing good like I played also here like the last two matches".
"To be able to get these matches, players that are playing this well, I'm going to face a lot of them this year".
The hugely anticipated match-up of the only two Australian Open winners and Grand Slam champions left in the women's draw got top billing at the Rod Laver Arena.
Halep closed out the dramatic contest on the first match point, when Davis, who had gone for broke all match, fired into the tramlines. "It's a little bit different than with Torben, but you know, I think I needed the change, and that's why I made a decision to change everything".
Halep will next play Naomi Osaka, who beat 18th-seeded Ash Barty 6-4, 6-2. The 2016 victor from Germany and 21st seed roared past the unseeded Russian 2008 champion 6-1, 6-3 in 64 minutes to reach the last 16. No. 20 Barbora Strycova beat U.S. qualifier Bernarda Pera 6-2, 6-2, leaving U.S. Open finalist Madison Keys as the only American woman to reach the fourth round.
Another unexpected loss at a major had the highly touted Zverev admitting he may have a problem.
Sixth seed Karolina Pliskova is also in action, against Lucie Safarova, while eighth seed Caroline Garcia meets unseeded Aliaksandra Sasnovich.
Ottawa's Gabriela Dabrowski moved on in mixed doubles.