The fifth seed is the only player yet to drop a set on the way to the last eight and produced a near flawless display in powering past American giant John Isner in the last round.
Victory set up a quarter-final showdown with Nadal, but despite having beaten the Spaniard just twice in their nine previous meetings, Murray remains unfazed.
“I know the match against Rafa is going to be difficult, but I think I can win,” the Scot said.
“I think I’ve got some tactics that work well against him. I’m playing well. There’s no question about that. I just need to make sure I play my best.”
Nadal, seeded second, has not won a title since May and is yet to rediscover the kind of form which saw him overcome Roger Federer in last year’s thrilling Melbourne final, which he won in five sets.
Murray will also take comfort from Nadal’s recent record against top-10 players. Since suffering a surprise defeat to Robin Soderling at the French Open last year, Nadal has won just once in 11 matches against the world’s elite.
Nadal, however, is not concerned with his form, but knows he will have to play his best tennis to progress to the last four.
“The numbers are the numbers, so it is probably not the best form of my career against the top 10,” he added. “But I am happy with the draw. The most important thing is I am in quarter-finals and I have only lost two sets.
“Andy is one of the more difficult players to play against. I will have to play my best tennis.”
Murray famously beat Nadal on his way to his only Grand Slam final at the US Open in 2008, and is quietly confident he can go one better in Melbourne.
“I just need to play like I have been and maybe a bit more if I want to win the tournament,” he added.