The Iceman sealed his 11-8 win in-style as he put on a scintillating display on a blistering night of tungsten action at the Winter Gardens.
Chisnall, who was eyeing his sixth quarter-final in Blackpool, took a 6-4 advantage and seemed in control of proceedings.
However, the next three legs proved pivotal as Price levelled the match, before punishing Chisnall's unsuccessful 76 checkout attempt by taking out 124 with the bull.
Once the Welshman took the lead, he would not relinquish it as he powered to the finish. However, Chizzy never made it easy and remained in close proximity after producing 142 and 111 checkouts in a high-quality contest.
"I knew I was playing well but I let Dave off a few times at the start, just like I did in my first round game," said Price.
"I was trying too hard to break Dave's throw and I got a bit frustrated.
"The big checkouts were nice, they go in about two or three times in ten; I needed them tonight.
"I'm really confident in my game, just sometimes I overthink it when I'm trying to break people down.
"I'm getting back to where I should be and I fancy myself against anyone."
Elsewhere, Jose de Sousa, Danny Noppert and Dirk van Duijvenbode all broke new ground after sealing their spots in the quarter-final for the very first time.
De Sousa booked his ticket after a hard-fought 11-8 victory over former world champion Rob Cross.
Noppert completed the job in double quick time after beating Daryl Gurney 11-4 in Wednesday's opener, while fellow Dutchman Van Duijvenbode dumped out Michael Smith with an impressive 11-7 win.
World Matchplay - Wednesday's results
Danny Noppert 11-4 Daryl Gurney
Jose de Sousa 11-8 Rob Cross
Gerwyn Price 11-8 Dave Chisnall
Dirk van Duijvenbode 11-7 Michael Smith
Thursday's order of play
Peter Wright vs Dimitri Van den Bergh
Michael van Gerwen vs Nathan Aspinall