Kerber, a winner in Melbourne Park in 2016, was unable to capitalise on an early double break in a first set but would put herself within touching distance of a third Australian Open quarter-final after claiming it on a tiebreak.
"It was extremely tough. In my head I lost it couple of times during the match. So I am really happy that I am standing here right now," Pavlyuchenkova said.
The players had equally spilt their 14 previous appearances coming into the fourth-round clash and there was not much separating them on the scoreboard on Monday till the end of the second set on Margaret Court Arena.
Pavlyuchenkova, who shocked world number two Karolina Pliskova in the previous round, passed on three set points in a second set she dominated – hitting 26 winners to Kerber’s 12 – but did send their match to a decider, winning the tiebreak comfortably.
And 30th seed Pavlyuchenkova built on her second-set superiority in the third, breaking the serve of Kerber three times to set up showdown with Muguruza.
In her next match, Pavlyuchenkova will face another multiple Grand Slam winner in Muguruza, who strolled past Kiki Bertens 6-3 6-3 earlier on Monday
With additional reporting from Reuters
Highlights: Pavlyuchenkova fights back to oust Kerber