The top two men - Andy Murray and Novak Djokovic - and three of the top four women - Kerber, Aga Radwanska and Simona Halep - have departed in the Open's first week.
Serena Williams will now be a prohibitive favourite to claim a seventh crown at Melbourne Park, but on the basis of Vandeweghe's showing, she could also go all the way.
"It's really special to play a number one player in the world on any stage. I believe its my first number one win so i'll take that," she said.
Kerber's loss continues a poor run for newly-installed female number ones.
Five of the last seven have been dumped from their first major as top seed earlier than the quarter-finals.
And should Williams take the crown, she will regain the world No.1 ranking from Kerber after spending 19 weeks as second banana to the German.
MURRAY OUT
Andy Murray crashed out earlier in the night, falling to German journeyman Mischa Zverev in a monumental fourth-round upset.
The three-time grand slam champion struggled to handle the world No.50's remarkable play at the net, slumping to a 7-5 5-7 6-2 6-4 defeat.
The shock result leaves the men's draw wide open after defending champion Novak Djokovic was earlier eliminated in the second round.
Britain's Andy Murray, right, waves as he leaves the court after losing to Germany's Mischa Zverev, left. Photo / AP
It is the first time since 2004 that the top two men's seeds have failed to reach the quarter-finals of a grand slam, and the first time tit has happened at Melbourne Park since 2002.
Zverev was cheered on by his younger brother Alexander, who was considered by far the most likely of the pair to make a deep run at the Open before his agonising five-set loss to Rafael Nadal on Saturday.
But it was the older sibling who shone in the spotlight on Sunday, stunning Murray with the performance of a lifetime in his sixth Open appearance having never previously made it past the second round.
The 29-year-old's reward for his career win is a quarter-final shot at either four-times champion Roger Federer or fifth seed Kei Nishikori, who play their fourth-round match on Sunday night.
"I don't know yet how I feel because everything is new to me and everything feels a little bit unreal," Zverev said.
Murray was far from his best against the unheralded left-hander, struggling with his second serve and growing increasingly frustrated by his seeming inability to read the German's play.
It is the first time in more than a decade that Murray has been defeated at a grand slam by someone ranked as lowly as Zverev.
"It just wasn't meant to be," the Scot said.
"He served very well when he needed to, especially when he was behind in games. He deserved to win.
"He came back from all of the mistakes that he made, kept coming up with great shots. There's not too much you can do about that. It was obviously disappointing to lose. But he did some good stuff out there."
With an opportunity to take a 5-3 lead in the fourth set, Zverev looked like nerves may get the better of him, hitting a simple forehand smash into the net.
But he quickly regrouped, playing a series of remarkable shots at the net to pull off one of the biggest upsets in Open history.
"Honestly, there were a few points where I don't know how I pulled them off," Zverev said.