O'Connell was unable to match the heroics of fellow Sydneysider Alexei Popyrin, bowing out with a 6-1 6-4 6-2 defeat to Sinner on Saturday.
After needing four sets to get through his opener, Sinner has dropped just 13 games in his past two matches, at an average of two a set, to underline his title favouritism.
The Australian Open champion was particularly clinical on serve, crunching down 15 aces, not offering up a single break point for the entire match and winning 82 per cent of points after landing his first delivery.
While Sinner next faces either American 14th seed Tommy Paul or Canadian qualifier Gabriel Diallo for a place in the quarter-finals, O'Connell can console himself with a career payday of $US215,000 ($A$315,000) for reaching the last 32.
Australian Chris O'Connell was no match for the world No.1. (AP PHOTO)
Two more Australians are in action on day four striving to join Popyrin in the second week.
World No.10 Alex de Minaur, even still playing less than 100 per cent fit in his first tournament back from the hip injury that forced him out of the Wimbledon quarter-finals, is favoured to take out British veteran Dan Evans in his third-round match on Louis Armstrong Stadium.
And after eliminating seventh seed Hubert Hurkacz in round two, Jordan Thompson also has a big opportunity to progress further against Italian world No.30 Matteo Arnaldi.
Popyrin will take on explosive American Frances Tiafoe on Sunday (Monday AEST) for a quarter-final berth after blowing the bottom half of the draw wide open with a stunning 6-4 6-4 2-6 6-4 disposal of Novak Djokovic. Â
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