Keothavong is into the third round of a Grand Slam for the first time
Anne Keothavong claimed a 6-2 3-6 6-4 win over Francesca Schiavone to become the first British woman to reach the third round of the US Open since 1991.
Keothavong, 24, broke the 25th seed in the first game and went on to win the first set before the Italian improved to take the second.
Schiavone moved 4-2 up in the decider but Keothavong responded superbly with four straight games to seal the win.
She plays fifth seed Elena Dementieva for a place in the last 16.
"Before the match I really believed I had a chance to win," said Keothavong, who had reached the second round with a defeat of American qualifier Alexa Glatch on Monday - her first Grand Slam win away from Wimbledon.
"I knew if I could hang in there and just get stuck in then I'd be in with a chance. I came away with the win so I'm pretty pleased with that."
It is 17 years since Jo Durie became the last Briton to reach this stage of the women's singles at Flushing Meadows, eventually bowing out in the fourth round.
If she is to equal Durie's feat, Keothavong will have to overcome Olympic champion Dementieva, who beat France's Pauline Parmentier 6-2 6-1 in her second-round match.
She had to show real character to see off Schiavone, 28, who began the match badly - and was serving particularly wildly - but quickly found her form.
The British number one took full advantage of her opponent's erratic start, moving into a 4-1 lead and eventually taking the first set 6-2 after seven set points in a marathon eighth game.
The second set was a different story, however, with Schiavone upping her game and signalling her intentions by breaking twice to go 4-0 up.
Keothavong, ranked 87th in the world, dug in and pulled back to 3-5 but could not save the set and looked nervous at the start of the decider.
Things looked ominous for the Londoner when Schiavone broke to go 3-2 up and then held to extend her lead, with Keothavong showing her frustration by hurling her racquet to the ground.
But that actually brought the best out of the Briton, who steadied herself and resumed the attacking tennis that had brought her success earlier in the match.
She levelled at 4-4 and held her nerve to move to within one game of victory.
Schiavone's serve again wobbled under pressure and she handed Keothavong the biggest win of her career with a double-fault on match point.
She's someone I've never played against before. I've practised with her in the past, and it will definitely be another tough match for me
Anne Keothavong on Elena Dementieva
"In the first set, she may have been a bit scrappy but I felt I did a really good job there," Keothavong added.
"Even in the final set when I went 4-2 down when I lost my serve there, I never felt at that point that I would lose the match.
"I felt that if I just kept fighting and hanging in there then my chance would come and, yes, I got there."
Now she has a clash with Dementieva, fresh from her Olympic success in Beijing, to look forward to.
"She's the Olympic gold medallist," Keothavong said. "Not many people can say they have a gold medal.
"She's someone I've never played against before. I've practised with her in the past, and it will definitely be another tough match for me.
"But I've got nothing to lose. I feel confident, I feel fit, and, you know, who knows?"
Fellow Briton Jamie Murray enjoyed a first-round victory alongside American Liezel Huber in the mixed doubles, the pair seeing off Andre Sa and Kateryna Bonarenko 6-3 6-2.