Keys withstood a fierce second-set fightback from Ashlyn Krueger to prevail 6-1 7-5 over her fellow American and extend her Open winning streak to nine matches.
World No.2 Iga Swiatek and Keys' fellow US-seeded guns Amanda Anisimova and Jessica Pegula also moved into the last 32 on a star-studded day five at Melbourne Park.
"I started really well and I think Ashlyn started a little bit slow," Keys said.
"And then I was fully expecting her to raise her level, which she did.
"But it just got away from me a little quickly and, even if I lost a set, I just wanted to make sure I tried to get back in the set, just try to figure out where my game went and be able to at least get a few more points on the board.
"Then once I got that momentum, I just tried to sink my teeth into the set and do whatever I could to get back into it."
Keys has not won a title since reigning at Melbourne Park last year and, unlike after arriving in 2025 following success in Adelaide, the veteran has struggled to find her A game.
But the 30-year-old is fine with that.
"Last year I played some unbelievable tennis and it's one of those things where you have moments in your career where things just aren't going right, and that's how it felt for a couple of weeks," Keys said.
"But even then I feel like there were still moments throughout the AO last year where things got really tricky and it's easy to look back and romanticise it and think I played unbelievable tennis.
"But everyone likes to remind me that I'm the losingest grand slam champion, where I lost more games than anyone in history while winning a grand slam.
"So obviously there is room for improvement there still."
Keys will play Karolina Pliskova for a spot in the last 16 after the Czech former world No.1 ended the run of Indonesian revelation Janice Tjen with a 6-4 6-4 triumph.
Anisimova was relieved to progress, the world No.4 needing almost two hours to see off Czech Katerina Siniakova 6-1 6-4.
Siniakova is the world's top-ranked women's doubles star but also produced levels of tennis much higher than her No.45 standing in singles to stress out Anisimova on Margaret Court Arena.
"That was quite a tough match," she said.
"It was getting a little crazy in the second set but playing against Katerina, she's such a legend.
"Just hearing how many grand slams she's won every time in doubles is just insane.
"So obviously she was really giving me a run for my money."
A finalist at Wimbledon and the US Open last year, Anisimova will play compatriot Peyton Stearns next on Saturday for a quarter-final berth.
Sixth seed Jessica Pegula also advanced on Thursday with a 6-0 6-2 win over McCartney Kessler in another all-American affair.
A three-time AO quarter-finalist, Pegula will meet Oksana Selekhmeteva in the third round after the Russian eliminated Spanish former world No.2 and 25th seed Paula Badosa 6-4 6-4.
Second-seeded Swiatek posted a fuss-free 6-2 6-3 win over Maria Bouzkova, while Maddison Inglis kept Australian hopes alive with an epic 6-4 7-6 (7-3) 7-6 (10-7) victory over German veteran Laura Siegemund.
The qualifier's reward is a likely clash on Saturday with two-time Open champion Naomi Osaka for an improbable place in the last 16.
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