Halep, beaten by Sharapova in the U.S. Open first round, won five of nine break points and took advantage of an error-prone display to hand the Russian her first straight-sets defeat of the season in an hour and 12 minutes.
Despite hitting more winners than her rival, Sharapova committed 39 unforced errors and struggled to contend with the Halep's power and aggression in Beijing.
"It was a great match, I think I played my best tennis against her," Halep said.
"I served pretty well, and the work that I did after the U.S. Open, I could see it on court today. I'm really happy that I could do this. It's my first victory against her and I just want to enjoy the moment."
Sharapova agreed with Halep's assessment of the pair's second meeting in six weeks after not playing the Romanian for almost two years.
"I think she played an incredible match, probably the best she's played against me in all of our previous meetings," she said. "I wasn't as sharp. I wasn't seeing the ball as well. I wasn't moving up and down as well as I have been against her.
"She was hitting the ball consistently, not making a lot of unforced errors, her service percentage was quite high. She did all the right things."
The Romanian goes through to the quarter-finals where she will face Kasatkina, who started slowly but grew in confidence to see off Radwanska 4-6 7-5 6-2.
Kasatkina hit 42 winners to Radwanska's 33 in a match that could have gone either way as both players racked up more than 40 unforced errors apiece.
French Open champion Jelena Ostapenko of Latvia qualified for the season-ending WTA Finals in Singapore with a 6-3 7-5 win over Australia's Samantha Stosur in round two.
She next faces on China's Peng Shuai, who made short work of Romanian Monica Niculescu with a 6-3 6-2 win.
Wuhan Open champion Caroline Garcia of France overcame Belgian Elise Mertens 7-6(4) 6-4, while Ukrainian Elina Svitolina beat Australia's Ashleigh Barty 6-4 6-2 in the second round to set up a clash with Russia's Elena Vesnina.
(Reporting by Shrivathsa Sridhar in Bengaluru; Editing by Christian Radnedge/Jeremy Gaunt)
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