Pegula made light work of Russian Oksana Selekhmeteva on Saturday, taking just an hour and six minutes to reel off a 6-3 6-2 victory and beat the heat on Margaret Court Arena.
The sixth seed will face Keys, who was also rarely challenged in a 6-3 6-3 win over Czech former world No.1 Karolina Pliskova in one hour and 15 minutes.
Pegula, who has reached the quarter-final at every major and was runner-up to world No.1 Aryna Sabalenka at last year's US Open, is in scintillating form.
The 31-year-old has somewhat gone under the radar behind Keys, world No.3 Coco Gauff - who reached the fourth round on Friday - and fourth seed Amanda Anisimova.
For her part, Anisimova continued her own ominous form with a 6-1 6-4 thumping of countrywoman Peyton Stearns.
But Pegula dropped just 10 games across the opening three rounds and looms large at the pointy end of the Open.
Asked if this could be her year, Pegula said: "Yeah.
"There's still a long way to go. I know if I win I might play the defending champ (Keys) next, which is gonna be tough.
"When the sun's out, the court gets kind of hot, it definitely skids.
"That does usually help me a little bit if I'm hitting well. So we'll see, but faster, slower, I've been working on my game so much to try to become a better player in all conditions."
Both matches started early to account for scorching conditions in Melbourne, but the roof was open on both Rod Laver Arena and Margaret Court Arena.
Floridian Keys was "excited" to play in the heat and clubbed 25 winners and served six aces against Pliskova.
"Definitely gives you a confidence boost when you know that when you're pushed is when you find your best tennis," big-hitting Keys said.
Keys is yet to drop a set in her title defence but was wary of what close friend Pegula, who she is on a podcast with, could deliver.
"It's going to be a tough match," Keys said.
"Jess is such a great player. She's always so consistently doing well every week that she plays.
"She's such a competitor, she's in every match, she's so gritty, so you know it's always going to be a tough match.Â
"It also makes it hard being friends - I think we have to film a podcast before we play a match, so we'll see how that goes."
Last year's Wimbledon runner-up and US Open semi-finalist Anisimova, 24, only needed 32 minutes to wrap up the first set against Stearns, then fought out a tricky second set.
The world No.4 let out a huge roar when she sealed victory and will face China's Wang Xinyu, who shocked 13th-seeded Czech Linda Noskova 7-5 6-4 after their match on Kia Arena was halted at 2-2 for more than four hours due to the blazing heat.
Anisimova believed she and fellow Florida-based stars Keys and Pegula were best-placed to handle the "super-hot" conditions.
"It's just the fact we had so many outdoor courts in the summer, it was always so hot, I hated training in the summer," Anisimova said.
"But you know what - at least it paid off a little bit."
World No.2 Iga Swiatek remains in the hunt to become the third youngest player to complete a career grand slam after battling past 31st-seeded Russian Anna Kalinskaya 6-1 1-6 6-1.
She will face unheralded Australian qualifier Maddison Inglis after her third-round opponent, two-time champion Naomi Osaka, pulled out hours before their scheduled match on Saturday night citing injury.
Earlier, Belgian veteran Elise Mertens was untroubled by qualifier Nikola Bartunkova in a 6-0 6-4 victory and will next meet world no.5 Elena Rybakina, who eased past Czech teen Tereza Valentova 6-2 6-3.
