Stephens secured her maiden appearance in a grand slam quarter-final with a composed three-set win over Serbia's Bojana Jovanovski and further impressed with her wise-cracking performance in an on-court interview after the match.
Joking about her nervous relatives and the A$250,000 ($262,600) prize money, Stephens also told the crowd at Hisense Arena that Williams had told her to grunt "louder", a reference to the 15-times grand slam champion's sometimes ear-splitting shrieks during play.
Much has been made of Williams's reported role as mentor to the 29th seed but the off-the-cuff comment continued a bit of banter from the teenager at the world number three's expense, carrying on from their heated match at the Brisbane International earlier this month.
Eventual champion Williams won the match in two sets but Stephens took the fight to the 31-year-old and was irked by her fist-pumping exhortations after winning big points.
Stephens told her coach that Williams was being 'disrespectful' during a change of ends, but later played down the comment as a joke.
With a sixth title at Melbourne Park on the line, Williams has backed away from the mentor role, saying she felt no responsibility toward Stephens.
"It's hard to be a real mentor when you're still in competition," said Williams, who strolled into their clash with a 6-2 6-0 thrashing of 14th seed Maria Kirilenko.
The pair will meet in the second match on Rod Laver Arena before Andy Murray takes on France's 36th-ranked Jeremy Chardy.
Chardy has enjoyed a brilliant run to his maiden grand slam quarter-final, overcoming sixth seed Juan Martin del Potro and 21st-seeded Andreas Seppi, and says he has the confidence to beat "everyone", including third seed Murray.
"He's a lot more calm on the court and he deals with emotion a lot better," former France Davis Cup captain Guy Forget told Reuters of Chardy. "Once he was too aggressive and emotional, but now he's choosing his shots a lot better."
Chardy also beat the 25-year-old Scot at the Cincinnati Masters in their last match and is certain to offer him more competition than 14th seed Gilles Simon, who could hardly run in their three-set match, having exhausted himself in a near-five hour marathon in the previous round.
The winner will book a semi-final against either Roger Federer or seventh seed Jo-Wilfried Tsonga, who play in the evening session at Rod Laver Arena.
Federer destroyed the Frenchman in three sets the last time they played at Melbourne Park in the 2010 semi-finals, but Tsonga avenged the defeat the following year at Wimbledon, when he stunned the 17-times grand slam champion in the quarter-finals.
It has all been one-way traffic since, however, with Federer winning their past four encounters, leaving aside a walkover at the 2012 tournament in Doha when the Swiss pulled out injured.
Belarusian Victoria Azarenka, needing to defend her title successfully to preserve her world number one ranking, kicks off the action against twice grand slam champion Svetlana Kuznetsova of Russia.
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