Kyrgios has stepped into the limelight once occupied by the struggling Bernard Tomic as Australia's most exciting prospect, with players and pundits tipping grand slam success for the Melbourne boy.
The hype has not gone down well with 11-times grand slam title winner Laver, who sees it a roadblock to the player's ambitions.
"That's a mistake, people talking cheap news," Laver, the only man to complete a calendar year grand slam twice, told Australian reporters at the All-England Club.
"Otherwise he's going to think, 'I don't have to work as hard now' and that's sort of the reverse you want him to be in. He has to try and practise even more and harder."
Kyrgios underlined his class with a nerve-jangling win over seasoned Frenchman Richard Gasquet in the second round but Spaniard Nadal will be the ultimate test of his development.
A win over Nadal, who notched his 14th grand slam title win at Roland Garros last month, would send the hype soaring into the stratosphere Down Under, but Laver poured cold water on the prospect.
"I'd have to say no, but at the same time, if he takes a set, it might be an upset in time," the 75-year-old said. "He's got all the shots, Nick, so why not win?
"If Nadal's on a good game, he's hard to beat. Can (Kyrgios) play against the heavy spin that Nadal has? That you really can't add up, but he's tall and that's needed against Nadal."
(Writing by Ian Ransom; Editing by Greg Stutchbury)
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