The Bulgarian third seed, a semi-finalist at Melbourne Park last year, barely got out of first gear as he displayed his considerable range of skills to oust his Austrian opponent in just 98 minutes on Rod Laver Arena.
The 26-year-old, who finished last season with the biggest win of his career at the ATP Tour finals, hit 21 winners and toyed with his outclassed opponent at times.
The world number three sealed victory on his second match point when Novak netted a backhand and will next face another qualifier in either American Mackenzie McDonald or Swede Elias Ymer.
"I just tried to be compact, focussed, really use every opportunity I had and save some energy," Dimitrov said in a courtside interview.
Dimitrov's London triumph and his career high seeding have brought him to Melbourne Park as one of favourites to land the year's first grand slam.
Beaten in a five-set thriller by Rafael Nadal in the semis at last year's Australian Open, Dimitrov clearly believes he is embarking on another long campaign in Melbourne.
"It's always been a dream of mine," he said when asked about his grand slam ambitions.
"I've achieved a few things that I always wanted already but this is the next step.
"I'm not going to lie, I'm not going to try and be too modest, but it's match-by-match and the only thing I can do is give 100 percent and build in every match that I have."
Dimitrov has flattered to deceive before of course, landing in Australia almost every year with a new reason, and often a new coach, to explain why this season would be the one where he would finally fulfil his incredible potential.
A reasonably good draw has left him with Nick Kyrgios and Jo-Wilfried Tsonga as the main potential barriers to the quarter-finals but Dimitrov reiterated that he was not looking past his match against McDonald or Ymer.
"I've seen Ymer play a few of times, I've played him once on clay, but every match you play, you have to perform and never underestimate your opponent, simple as that," he added.
"I'm looking on my side of the net, that's all, I'm just excited, I'm enjoying the game, everything is good."
(Reporting by Nick Mulvenney; Editing by John O'Brien/Peter Rutherford)
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