Osaka defeated 60th-ranked American Katie Volynets 6-3, 6-2 and faces Gauff in a showdown of former US Open champions in Beijing.
World number two Sabalenka swatted aside Ashlyn Krueger 6-2, 6-2 and plays another American in 24th-ranked Madison Keys.
Former world number one Osaka is playing her first tournament under Patrick Mouratoglou, the Frenchman best known for being the long-time former coach of Serena Williams.
The Japanese player has struggled for consistency and form since returning to tennis in January after the birth of her daughter Shai, in July last year, and is ranked 73rd in the world.
She lost in the second round of the recent US Open and her best results after becoming a parent have been two quarter-final appearances.
But in a commanding performance against Volynets, Osaka showed glimpses of the talent that has brought her seven WTA titles including the China Open in 2019, the same year she triumphed at the Australian Open for the first time.
She also won the title in Melbourne in 2021 and is a two-time US Open champion.
The 2023 New York champion Gauff booked her place in the last 16 with a 7-5, 6-2 victory over Britain's Katie Boulter on Sunday.
The 20-year-old American Gauff is seeded fourth.
She and Osaka have played four times previously, each winning twice. Their last meeting was in 2022 at San Jose when Gauff prevailed 6-4, 6-4.
Reigning US Open champion Sabalenka was error-prone in winning her opening match in Beijing against Thai qualifier Mananchaya Sawangkaew in straight sets.
But the Belarusian was right on it from the start against 68th-ranked Krueger, racing into a 4-1 lead in the first set.
Sabalenka wobbled a little when serving for the set at 5-2, squandering set point and then facing break point.
But Sabalenka kept her cool, saving the break point and then wrapping the set up after 30 minutes when Krueger found her powerful forehand too hot to handle on a second set point.
Neither player could hold serve at the beginning of the second set before Sabalenka took a stranglehold at 4-1.
Sabalenka will take some stopping. Fourteen of her 16 titles have come on hard courts and only Iga Swiatek has won more matches on tour this season.
Top-ranked Swiatek is not in Beijing because of "personal matters".
