The 58th-ranked Chung beat a top-five ranked opponent for the first time with his 5-7, 7-6 (7/3), 2-6, 6-3, 6-0 victory in 3hr 22min on Rod Laver Arena.
Chung's feat also makes him only the third South Korean player -- man or woman -- to reach the round of 16 at a Grand Slam.
"It was really tough, he is a really good player and we know how to play each other," said the glasses-wearing 21-year-old, who trained in the heat of Thailand before coming to Melbourne.
"I played Novak two or three years ago, so if he wins tonight I just want to enjoy things on the court."
It was another disappointing exit from a Grand Slam for the highly-ranked Zverev, whose game fell apart in the final set and was issued with a warning for smashing his racquet in frustration after a service break.
Federer keeps hunt for Slam number 20
Defending champion Roger Federer continued his dominance over Richard Gasquet to reach the round of 16 on Saturday and keep his quest for a 20th Grand Slam title on track.
The Swiss star beat the Frenchman 6-2, 7-5, 6-4 in just under two hours in a night match on Rod Laver Arena.
Federer has unheralded Hungarian and one-time training partner Marton Fucsovics up next and a potential quarter-final with Tomas Berdych, who upset Juan Martin Del Porto in straight sets earlier Saturday.
Federer, rated the favourite to win his 20th major even at the venerable age of 36, progressed to the fourth round at the Australian Open for the 16th time.
The Swiss has only lost twice to the stylish Frenchman in their 19 meetings, winning all their four Grand Slam encounters.
Significantly, Gasquet hasn't won a set against Federer since 2011, a run of 22 sets to the Swiss.
"I was able to stay more on the offensive than he was and maybe I was protecting my own serve better than him," Federer said.
"The second set was tight. The match was close. Tough games. The end could have gone to a tie-breaker, and then you never know.
Djokovic fourth round
Novak Djokovic battled with a lower back injury as he claimed his 11th round of 16 appearances at the Australian Open on Saturday.
The six-time champion advanced with a clear-cut 6-2, 6-3, 6-3 win over Spanish 21st seed Albert Ramos-Vinolas in 2hr 21min on Margaret Court Arena.
But there was concern in the Serb's camp when the former world No.1 sought a medical timeout early in the second set for treatment to his lower back.
Djokovic, looking for matches after six months out with right elbow trouble, will next face South Korea's Chung Hyeon in Sunday's fourth round.
The injury was a fresh concern for the 12-time Grand Slam champion, whose ranking has slipped to 14 after an inactive second half of 2017.
But Djokovic was workmanlike as broke the Spaniard's serve five times, although his errors outnumbered his winners 40-37.
Thiem eases past Mannarino
Austria's fifth seed Dominic Thiem reached the round of 16 with a straight sets win over Frenchman Adrian Mannarino on Saturday.
Thiem downed the 26th-seed 6-4, 6-2, 7-5 in 2hr 8min on Margaret Court Arena and will face either German Maxmilian Marterer or American Tennys Sandgren for a place in the quarter-finals.
The Austrian has now reached the round of 16 at his last six Grand Slams.
Thiem showed no ill-effects of his five set win over American qualifier Denis Kudla in the second round in fierce heat on Thursday.
The victory took his record over Mannarino to 7-0.
Berdych ends Del Potro's Australian Open
Veteran Tomas Berdych reached the round of 16 for the 10th time at the Australian Open with a straight sets win over Juan Martin Del Potro on Saturday.
The 32-year Czech eliminated the 12th-seeded Argentine 6-3, 6-3, 6-2 in 2hr 16min on Hisense Arena.
Berdych, who has played in the semi-finals twice in Melbourne, will face Italian journeyman Fabio Fognini in their first Grand Slam match in Monday's fourth round.
Berdych served up 20 aces, broke serve seven times and hit 52 winners with 28 unforced errors.
Kerber crushes Sharapova
Angelique Kerber crushed Maria Sharapova in straight sets in a battle of former champions on Saturday.
The 2016 winner from Germany and 21st seed roared past the Russian 2008 champion 6-1, 6-3 in 64 minutes on Rod Laver Arena to reach the last 16.
Kerber will face either 26th seed Agnieszka Radwanska of Poland or Taiwan's Hsieh Su-wei for a place in the quarter-finals.
'Almost dead' Halep joins last 16
World number one Simona Halep saved three match points to survive a titanic struggle and make the last 16 at the Australian Open Saturday where she joined Karolina Pliskova and Dominic Thiem.
With the temperatures a manageable 26 Celsius (79 Farenheit) at Melbourne Park after two days of oven-like conditions, the Romanian looked out for the count against American Lauren Davis.
But she finally got over the line 4-6, 6-4, 15-13 in a gruelling 3hr 44min on Rod Laver Arena to make the fourth round in a contest that took its toll.
"I'm almost dead," the tenacious Romanian said after the incredible battle, in which Davis lost a toenail and Halep served for the match four times.
"The feeling in my muscles is gone and I don't feel my ankle anymore," she added.
Davis is ranked just 76 in the world and was knocked out in the first round of all four Grand Slams last year, but you would never have known it.
Halep, a former quarter-finalist at Melbourne Park who slumped out in the first round last year, will next play Australian Ashleigh Barty or Japan's Naomi Osaka in her quest for a maiden Grand Slam title.
Sixth seed Pliskova also had a tough test, beating fellow Czech Lucie Safarova 7-6 (8/6), 7-5.
In contrast, US Open finalist Madison Keys was in fine touch as she benefits from the guidance of former great Lindsay Davenport.
Flying under the radar, the 17th seed has surrendered just 16 games on her way to the fourth round after beating Romania's Ana Bogdan 6-3, 6-4.
"Lindsay is amazing. We've had three years together and she has taught me how to handle big moments like this," said Keys, who made the Australian Open semis in 2015.
She will next test herself against French eighth seed Garcia, who was too strong for Belarussian Alaksandra Sasnovich, winning in three sets.
"I haven't done too well against her before and I want to improve," Garcia said of Keys.
Osaka ousts Aussie hope Barty
Unseeded Naomi Osaka downed local Australian Open hope Ashleigh Barty with a comprehensive 6-4, 6-2 win Saturday to reach the last 16 of a Grand Slam for the first time.
Ranked 72, her reward is a clash with top seed Simona Halep for a place in the quarter-finals.
The powerful Japanese 20-year-old took the first set against the 18th seed in 38 minutes before racing to a 4-0 lead in the second on the back of an impressive serve.
Barty finally got on the board in her third service game but it was too little too late to the dismay of the raucous band of "Ash's Army" supporters on Margaret Court Arena.
Osaka, who beat this year's fourth seed Elina Svitolina in Melbourne as an 18-year-old two years ago, served out calmly -- smacking down her 12th ace on match point to win in 73 minutes.
"I feel really happy, but also I'm sorry because I know you all really wanted her to win," Osaka, whose mother is Japanese and father is Haitian, told the crowd afer her win to great applause.
"I'm honoured to be playing for Japan," she said before adding that she had benefited from a late switch of the match from the Rod Laver Arena centre court to the smaller venue because of matches overrunning.
"I think there would have been a lot more people cheering for her there so it was good for me," she said. "Thank you all for a great atmosphere. I always wanted to experience playing against an Australian
Results from the Australian Open on Saturday
- Dominic Thiem (AUT x5) bt Adrian Mannarino (FRA x26) 6-4, 6-2, 7-5
- Tennys Sandgren (USA) bt Maximilian Marterer (GER) 5-7, 6-3, 7-5, 7-6 (7/5)
- Marton Fucsovics (HUN) bt Nicolas Kicker (ARG) 6-3, 6-3, 6-2
- Fabio Fognini (ITA x25) bt Julien Benneteau (FRA) 3-6, 6-2, 6-1, 4-6, 6-3
- Chung Hyeon (KOR) bt Alexander Zverev (GER x4) 5-7, 7-6 (7/3), 2-6, 6-3, 6-0
- Tomas Berdych (CZE x19) bt Juan Martin Del Potro (ARG x12) 6-3, 6-3, 6-2
- Novak Djokovic (SRB x14) bt Albert Ramos (ESP x21) 6-2, 6-3, 6-3
- Roger Federer (SUI x2) bt Richard Gasquet (FRA x29) 6-2, 7-5, 6-4
- Karolina Pliskova (CZE x6) bt Lucie Safarova (CZE x29) 7-6 (8/6), 7-5
- Madison Keys (USA x17) bt Ana Bogdan (ROM) 6-3, 6-4
- Simona Halep (ROM x1) bt Lauren Davis (USA) 4-6, 6-4, 15-13
- Caroline Garcia (FRA x8) bt Aliaksandra Sasnovich (BLR) 6-3, 5-7, 6-2
- Naomi Osaka (JPN) bt Ashleigh Barty (AUS x18) 6-4, 6-2
- Barbora Strycova (CZE x20) bt Bernarda Pera (USA) 6-2, 6-2
- Angelique Kerber (GER x21) bt Maria Sharapova (RUS) 6-1, 6-3
- Hsieh Su-wei TPE) bt Agnieszka Radwanska (POL x26) 6-2, 7-5