Djokovic was a shoo-in for the late-night slot at Rod Laver Arena but ended up a walkover into the quarter-finals when his opponent Jakub Mensik withdrew injured from their fourth round match.
Enter American Shelton, who shrugged off a slow start to deliver a crowd-pleasing win over 12th-seeded Norwegian Ruud.
Fans missing 10-time Australian Open champion Djokovic punctured the air with cries of "Go Novak!" during the match - but Shelton took it with good humour.
"For me, atmosphere is everything. So I want to thank you guys for staying out here," the eighth seed said on court.
"I know you guys were probably looking forward to Novak tonight, I heard it from the stands.
"But I hope we didn't disappoint you with this match."
Shelton, who banged down 14 aces and fired a 228 km/hr serve as he closed out the match, will meet double defending champion Jannik Sinner for a place in the semi-finals.
Shelton may need to channel Djokovic circa 2023 to take down Sinner, having lost eight consecutive matches to the Italian, including in last year's semi-finals at Melbourne Park.