The 22-year-old, who has reached his first ever quarter-final in Melbourne, faces the powerful Spaniard at 0830GMT on Tuesday and says he has the tactics to overcome the world number two.
“I think I can win,” Murray said. “I think I’ve got some tactics that work well against him. I’m playing well.”
“I just need to play like I have been, and maybe a bit more if I want to win the tournament.”
The Scot has only beaten Nadal twice in nine previous meetings, but Murray believes that Melbourne’s hard courts will give him an advantage.
“I’ve played him indoors, hard courts, clay courts, and grass. Each time obviously it’s a bit different,” he continued.
“I’ve played him in some really good matches on hard courts.”
As Murray continues his quest to end Britain’s 74-year wait for a men’s singles Grand Slam title, his opponent offered him some words of encouragement.
“He is going to have a lot of chances to win a Grand Slam and I think he is going to do it for sure,” said Nadal.
“He has enough results from the past to be confident of a win at a Grand Slam. I don’t think Andy has to prove anything to anybody. He can win for sure.”
And the Spaniard emphasised that he is not expecting an easy game against Murray.
“Andy is one of the more difficult players to play against,” he continued.
“I will have to play my best tennis. He’s one of the most talented players on tour. He can play offensive, he can play defensive. He can do a lot of things during the same match.”
MORE: The latest football news
MORE: The latest tennis news
BIOGRAPHY: Daniel Sturridge
BIOGRAPHY: Kepa Arrizabalaga