The 27-year-old is ranked 21 but, having reached his first grand slam singles final at Wimbledon last summer and then the quarter-finals of the US Open, has shown he can be a serious contender on the biggest stages.
Kyrgios' commitment to tennis has been repeatedly questioned over the past few years but he turned a corner after lifting the doubles crown here last year with Thanasi Kokkinakis and will bid to become the first home men's singles champion since Mark Edmondson in 1976.
"I am one of the best players in the world so I'm definitely going to go into the Australian Open, any tournament, with confidence," said the Australian number one after practice at Melbourne Park.
"It's a bit different this time around for me being one of the favourites. Usually I'm a dark horse type thing but now, obviously after the year I've had, I'm one of the favourites so it's kind of new for me as well.
"This is the first time I've genuinely gone into a slam feeling like I'm one of the guys that can really take the trophy and knock on the door. I don't know what I'm going to be feeling when I get out there.
"Usually I've got nothing to lose and just putting on a show, but I've got to try to really find that balance. Fourteen days to win one of these things is not easy. Obviously I'm capable but so many other people are capable as well."
Kyrgios pulled out of representing Australia at the United Cup on the eve of the tournament citing a leg injury but declared himself fit and ready on Thursday while announcing his investment in the South East Melbourne Phoenix basketball team.
He is due to take on Novak Djokovic in a practice match in Rod Laver Arena on Friday evening, with tickets selling out inside an hour.
Djokovic has been struggling with a hamstring injury sustained in Adelaide last week and cut short a practice session on Wednesday but he was back on court on Thursday, albeit with strapping protecting the problem.
Kyrgios expects the clash to go ahead, saying: "I haven't heard anything else. He knows what he needs to be feeling moving forwards. But I wouldn't have any doubt. I still think he's a clear favourite."
Djokovic's return to Melbourne following last year's deportation will be one of the main themes of the tournament.
Kyrgios was one of the few players to publicly stick up for Djokovic and criticise his country's handling of the saga, changing the two men's relationship, which had been frosty.
Fans have already been told they will be thrown out if they are disruptive in their reactions towards the nine-time Australian Open champion.
Kyrgios said: "I know people are always going to have people they hate on court and people they love. I'm one of the players that deals with it everywhere.
"I would just say Novak's here and he hasn't made any rules. He's here and all he wants to do is put on a show.
"He's chasing things that athletes rarely are able to chase, he's one of the greatest athletes of all time, not just on a tennis court. I know there are going to be people that won't want him to win but I think they just can't cross that line as fans."
Friday also sees the first episodes released of Netflix's tennis documentary Break Point, in which Kyrgios is one of the stars.
"It wasn't only for me," said the Australian. "I think it's in desperate need for the tennis world to get put on the map globally again. Obviously when Novak and (Rafael) Nadal go as well as Roger (Federer).
"This Netflix (show) is kind of the last hope that tennis is going to be interesting globally on the map for a long, long time. We've got a lot of young personalities. I think the first episode is pretty exciting and I think it will keep people interested for sure."