The 6-1, 6-3 victory for the lanky Russian ended with an ace at Rod Laver Arena in Melbourne.
“I think when we both looked at the draw, it was a matchup we were both looking forward to,” Sharapova said afterward. “I was a really determined player out there because I knew the tennis that she's capable of producing and playing. She's a tremendous athlete and a great champion.”
Sharapova, who won her first two matches of the tournament without dropping a game, will play unseeded Kirsten Flipkens of Belgium in the fourth round.
Williams, a winner of seven Grand Slam events, didn't offer much resistance Friday.
"Definitely not my best today, but there's always other days to play better,” Williams said. “I just had a lot of errors ... that never helps.”
Williams finished the match with 26 unforced errors.