Djokovic beat Stepanek 6-4, 6-3, 7-5 to advance to the fourth round and extend his winning streak to 17 matches at the Australian Open.
Djokovic broke the 34th-ranked Stepanek late in each set, but was troubled at times against a wily veteran who mixed up the tempo with a lot of serve-and-volley and some unorthodox shot-making.
"Absolutely it was great. Great match and great fun," Djokovic said. "It's always tricky to play Radek. He's a talented player. Skillful player."
Djokovic, the two-time defending champion who also won the title at Melbourne Park in 2008, is hoping to become the first man in the Open era to win three consecutive Australian titles. He will next play either American Sam Querrey or Switzerland's Stanislaw Wawrinka in the fourth round.
Fifth-ranked Angelique Kerber survived some nervous moments before fending off American teenager Madison Keys 6-2, 7-5 in their third-round match.
Kerber will next play No. 19 Ekaterina Makarova of Russia, who advanced after a tough 6-7 (4), 6-3, 6-4 win over 2007 Wimbledon finalist Marion Bartoli.
Fourth-seeded Angieszka Radwanska, meanwhile, won her 12th match in a row with a 6-3, 6-1 victory over Britain's Heather Watson.
Radwanska will now meet 2008 French Open champion Ana Ivanovic, who beat Jelena Jankovic 7-5, 6-3 in a matchup featuring two Serbians who were both formerly ranked No. 1.
Sixth-seeded Li Na advanced with a 6-4, 6-1 win over No. 27 Sorana Cirstea of Romania and will next play No. 18 Julia Goerges, who prevented an all-China fourth-round encounter by beating Zheng Jie 6-3, 1-6, 7-5.
Li won the 2011 French Open just a few months after reaching the final at the Australian Open. Reigning French Open champion Maria Sharapova was playing seven-time major winner Venus Williams in a night match.
After soaring to 106 degrees on day four, the temperature dropped into the mid-70s, and light rain briefly interrupted play on some courts.
Roger Federer has won four Australian Open titles among his 17 majors, and is ordinarily one of the most popular athletes in Australia. The only problem is this: His 6-3, 6-4, 6-4 win over Nikolay Davydenko on Thursday night set Federer on course for a third-round match against Bernard Tomic, the last remaining Australian in the men's or women's draws.
The 20-year-old Tomic beat German qualifier Daniel Brands 6-7 (4), 7-5, 7-6 (3), 7-6 (8).
"I don't think it matters whether he's the last Australian or 10 more," Federer said. "There's always excitement about Aussies playing here. I played him here last year. The crowd was great. I expect something similar. If it's not, if it's totally for him, that's fine, too. I'm always excited when the crowd gets into it."
U.S. Open champion Andy Murray advanced with a 6-2, 6-2, 6-4 win over Joao Sousa of Portugal to move into the third round, along with 2009 U.S. Open champion Juan Martin del Potro, 2008 Australian finalist Jo-Wilfried Tsonga and his fellow Frenchman Richard Gasquet, No. 13 Milos Raonic of Canada and No. 17 Philipp Kohlschreiber of Germany.
On the women's side, top-ranked Victoria Azarenka advanced and Serena Williams had an easy second-round win to ease any concern about an ankle injury that threatened to derail her bid for a third straight major title.
Also moving on were 42-year-old Kimiko Date-Krumm, former No. 1 Caroline Wozniacki and British teenager Laura Robson.
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