Australia young gun Nick Kyrgios knocked top seed Roger Federer out of the Madrid Open on Wednesday with a stunning 6-7 (2/7), 7-6 (7/5), 7-6 (14/12) victory.

The fast-paced contest took more than two and a half hours and denied top seed Federer any chance at a fifth title at the claycourt Masters event.

Kyrgios, who knocked Rafael Nadal out of Wimbledon last year, sent down 22 aces to Federer's 15 and next faces John Isner of the United States.

The Swiss saved five match points in the deciding tiebreaker while having two of his own annulled by the big-hitting Australian youngster, ranked 35th.

"I couldn't return his first serve, I had a horrible performance on return of serve," said Federer. "That made life difficult for me.

"I'm disappointed with how I played on returns, and that cost me the match."

Meanwhile, Nadal returned to his clay-court comfort zone, starting his campaign for a fifth Madrid Open title with a 6-4, 6-3 defeat of Steve Johnson.

The victory in 74 minutes lifted Nadal's clay record over Americans to a perfect 10-0 while the third seed improved to 12-3 on the surface this season.

The nine-time French Open champion has four Madrid titles and has played in six finals at his showcase home event.

He is aiming to extend his streak of winning at least one European ATP clay title leading into Roland Garros to 11 straight years.

Nadal goes on to face Italy's Simone Bolelli for a quarter-final spot.

"I think I played a solid match, I played the way I needed to to win that match. I know after a loss like Barcelona (third round) things are not easy when you're playing the next match," said Nadal.

"I tried to play the easiest way possible without trying very difficult shots, and trying to be better and better during the match."

Women's top seed Serena Williams and defending champion Maria Sharapova survived marathon three-setters to reach the quarter-finals.

Williams saved three match points and needed two and three-quarter hours to take her undefeated record this season to 23-0, making the most of a late serving collapse from former number one Victoria Azarenka.

"I could have won, she could have won. I ended up winning and I don't know how," said Williams after her 7-6 (7/5), 3-6, 7-6 (7/1) win. "I feel like it was intense."

"I don't feel like there were a lot of long points, which was weird."

Williams next faces Carla Suarez Navarro after the Spanish 10th seed beat Serbian seventh seed Ana Ivanovic 7-5, 1-6, 6-4.

Third seed Sharapova went two and a half hours before seeing off Frenchwoman Caroline Garcia 6-2, 4-6, 7-5.

Sharapova ended the dramatic third-round match with a second-serve ace confirmed from the chair after breaking for 6-5.

Against Sharapova, the 28th-ranked Garcia, clearly peeved to have missed her chance against the five-time Grand Slam winner, gave an abbreviated "drive-by" handshake as the players met for a few quick seconds at the net, following protocol in name only.

"In the third it just came down to a few points, she was the much more aggressive player in the third set; she was going for a lot," said Sharapova.

Sharapova started 2015 by winning 17 of her first 18 matches, but came to Madrid having lost three in a row.

She has now won 57 of her last 62 matches on clay as she waits to play fifth seed Caroline Wozniacki in the quarters.

Wozniacki advanced over Poland's Agnieszka Radwanska 6-3, 6-2.

Two-time Wimbledon winner Petra Kvitova, the fourth seed, advanced with ease over Russian Anastasia Pavlyuchenkova 6-1, 6-4.

Romanian Irina Begu beat Barbora Strycova 6-4, 6-4 to next take on Kvitova.

Nadal was joined in the third round by sixth seed Tomas Berdych, who accounted for weekend Estoril winner Richard Gasquet 7-6 (7/3), 7-5.

Spanish seventh seed David Ferrer beat Albert Ramos-Vinolas 6-4, 6-0 and Madrid's Fernando Verdasco knocked out US Open champion Marin Cilic 6-7 (5/7), 7-6 (7/5), 6-3.

Bulgarian tenth seed Grigor Dimitrov came back to beat Italian Fabio Fognini 3-6, 6-2, 7-5 while Leonardo Mayer beat 11th seed Feliciano Lopez 7-6 (7/3), 7-6 (8/6).

Number 12 Frenchman Jo-Wilfried Tsonga beat American Jack Sock 6-3, 1-6, 7-6 (7/4).

Isner, the 16th seed, fired 23 aces to defeat Brazil's Thomaz Bellucci 7-6 (7/5), 6-7 (11/13), 6-1.