Verdasco became the first left hander, other than world number one Rafa Nadal, to beat Murray in a grand slam and also notched his first victory in six matches against the Briton.
The 21-year-old Scot, one of the pre-tournament favorites and widely tipped to end Britain´s 73-year wait for a men´s singles grand slam champion, produced flashes of brilliantly controlled tennis but also made numerous elementary errors.
On several occasions throughout the match he chastised himself, at one point in the fourth set screaming "what the hell are you doing?"
Rafael Nadal had to go three full sets to reach the quarterfinals, ousting 2007 runner-up Fernando Gonzalez 6-3, 6-2, 6-4.
The two previous fourth-round matches in Rod Laver Arena were cut short when players retired with illness or injuries. A third match was over quickly, with Svetlana Kuznetsova´s win over Zheng Jie on Hisense Arena lasting five games before the Chinese player retired with an injured left wrist.
Second-seeded Serena Williams lost the first set to Victoria Azarenka but was up a break in the second when her tearful and dizzy Belarusian rival had to quit because of a vomiting virus.
"Honestly, I got worried," Williams said. "She started walking really slow. The last thing she would want to do, to me, would be fall. It was just weird. I was actually really worried."
In the opening match on center court, No 6 Gilles Simon was leading 6-4, 2-6, 6-1 when his friend and fellow Frenchman Gael Monfils retired with a right wrist problem.
That brought top-ranked Nadal and Gonzalez on earlier than expected to determine who would meet Simon in the next round.
Nadal ran off 12 of the first 13 points and broke Gonzalez twice in the first set en route to his third quarterfinal appearance at Melbourne Park in his last three trips.
The 22-year-old Spaniard went down a break in the third set but rallied to win five straight games and six of the last seven.
Gonzalez, who beat Nadal here in the quarterfinals on his run to the final two years ago, was coming off a difficult third-round win, when he rallied from two sets down to beat Richard Gasquet 12-10 in the fifth.
Matches early Monday were over surprisingly quickly, considering conditions were sunny and mild with temperatures hovering around 23 degrees C.
Williams was up a service break at 4-2 in the second set after No 13 Azarenka had won the first set 6-3.
Azarenka, serving at 30-30, wobbled back into the shade at the rear of the court, holding her face and choking back tears as she tried to compose herself.
She had needed a medical time-out earlier in the set and left the playing arena. She returned for 1 1/2 games but was unable to continue and was helped from the court soon after by two trainers.
"The doctors didn´t want me to keep going, but I wanted to keep trying and see how I do," she said. "But it was probably not a very good idea because it just gave me even more trouble after."
Azarenka was taking the match to Williams, with both women going for winners constantly. She appeared to become ill after pulling within 3-2 and went off court. Williams took advantage of the time to get her ankles retaped. Later, she said she´d been feeling sick all morning.
"I woke up at 6 a.m. and I was throwing up all the morning and just felt weak," she said. "Once I got to the court, I went to see the doctor, I felt a little bit better.
"It´s very disappointing for me that I played that well and I couldn´t handle a little bit more because it was really close games."
Williams, seeking a 10th Grand Slam singles title, next plays 2004 US Open champion Svetlana Kuznetsova, who advanced when Zheng retired while trailing 4-1 in the first set after tumbling onto her wrist at the end of the third game.
Williams and Kuznetsova are the only major winners still in the women´s draw.
The winners of Monday´s two completed women´s matches meet in the quarterfinals.
Carla Suarez Navarro, the 20-year-old Spaniard who had an upset win over seven-time Grand Slam winner Venus Williams in the second round, beat No 21 Anabel Medina Garrigues 6-3, 6-2.
Olympic gold medallist Elena Dementieva made the quarterfinals for the first time in 11 years at Melbourne Park with a 6-2, 6-2 win over Slovakia´s Dominika Cibulkova.
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