Andy Murray's hopes of a first Australian Open title blew up in smoke as the world number one tumbled out in the fourth round to an inspired Mischa Zverev.

Murray had been the outstanding favourite in Melbourne following Novak Djokovic's early exit but the Scot was woefully out of sorts on Rod Laver Arena as world number 50 Zverev sealed a shock 7-5 5-7 6-2 6-4 victory.

It is only the fourth time Murray has lost to an opponent ranked outside the top 40 at a grand slam and his first since 2007.

Zverev, who was playing his first ever grand slam fourth round, will now face either Roger Federer or Kei Nishikori in the quarter-finals.

The German is a throwback to the old days of serve and volley and he simply bamboozled Murray, usually so adept at the areas of pass and lob, with a brilliant display at the net.

"I was in a little coma," Zverev said on court afterwards. "I just served and volleyed my way through it.

"There were a few points where I don't know how I pulled it off but somehow I made it."

Zverev's younger brother Alexander, the much more fancied of the two siblings and sitting in his box, had stretched Rafael Nadal to five sets less than 24 hours before, but Mischa went one step further by inflicting arguably the biggest shock of Murray's career.

Even when he dumped a smash into the net late in the fourth his nerve did not waver, instead looking to his mother and coach in the box for reassurance.

"I always look at my mum because she smiles when I miss those balls, so I looked at her and it was okay," Zverev said.

On a potential quarter-final showdown with Federer, he added: "Everything is new to me, everything feels unreal.

"Maybe playing Roger would be a dream to me. He inspires me and he was my favourite player growing up."

Zverev won a staggering 65 points at the net and served and volleyed 119 times. He broke Murray's serve on eight occasions.

The result, when combined with Denis Istomin's surprise success against Djokovic on Thursday, leaves the men's draw remarkably open. Federer, Rafael Nadal, Stan Wawrinka or Milos Raonic look primed to capitalise.

There were no fewer than five breaks in a chaotic opening set, with Zverev luring Murray into a guerrilla battle of chipping, charging, punch and counter-punch.

Murray is usually a master of touch tennis and loves a target to pass, but his momentum was always fleeting, quickly checked by a combination of his own carelessness and Zverev's brazen rushing to the net.

Twice Murray led by a break and twice he gave it away, the second time when serving for the set, before two more wayward groundstrokes finally put Zverev in front. He served out with an ace.

The game was not up yet, Murray after all had lost only 31 of his 57 grand slam matches when one set down, with most of those defeats coming against more distinguished opponents than Zverev.

Just as in the first set, however, Murray spurned two breaks, both times with forehands sprayed long, and the second by about three feet.

He needed five set points to get over the line as he twirled around a lob and slapped it down the line before a sumptuous backhand return made it one-set all.

It felt like a possible turning-point but instead Murray sank to a new low in the third.

Another brilliant stretch volley gave Zverev one break and then he snatched another at 5-2 as Murray's backhand volley pinged off his frame and struck him in the face.

The game was still not up. Murray had won 13 of his 32 grand slam matches when down two sets to one, but his task grew even more formidable when Zverev struck an early break in the fourth.

The German was now in full flow, leaping into his opponent's second serve at every opportunity while Murray continued to miss shots he would normally execute in his sleep.

When another backhand pass crashed into the net, he could only put his racket up to his lips, seemingly in disbelief.

Leading 4-3, and with victory in sight, Zverev framed a smash into the base of the net for deuce but he still would not be deterred.

He held for 5-3 and was then at 5-4, serving for the match. Murray threatened a comeback at 30-30 but a missed backhand and then a final forehand wide confirmed defeat after a brisk three hours and 34 minutes.