The 22-year-old American claimed a rollercoaster first set that went for 85 minutes and included six breaks on Friday to set up the 7-6 (9-7) 6-3 7-6 (7-4) triumph on Rod Laver Arena.
Medvedev, who was beaten in the last two Australian Open finals, was simply outplayed by the tenacious Korda in their third-round clash
The son of 1998 Australian Open champion Petr, Korda continues his rise through the ranks with the biggest win of his career, advancing to the fourth round for the third time at a grand slam.
The 29th seed will meet Poland's Hubert Hurkacz in a final-16 clash.
The result came as a shock but Korda has started 2023 in outstanding form, pushing 21-time major winner Novak Djokovic to three sets in the Adelaide International final.
It is just Korda's second appearance at Melbourne Park, having been beaten in the third round last year.
The silky right-hander has previously reached the fourth round at Wimbledon (2021) and the French Open (2020).
Medvedev, a former world No.1, continues his search for a second grand slam to add to his 2021 US Open title.
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