Reigning World Youth Champion Cadby enhanced his growing reputation by reaching last weekend's Auckland Darts Masters final, and began the new World Series of Darts event with another impressive display.
Five-time World Champion Van Barneveld shared the opening eight legs with the Tasmania-born youngster, who claimed a crucial break of throw in leg nine with a 13-darter.
Melbourne-based Cadby then closed out victory in style with a 12-darter, following up four 140s with an 81 finish to seal a memorable triumph in his home event at the Hisense Arena.
Cadby will now meet 16-time World Champion Phil Taylor in Saturday's quarter-finals, having won the last two meetings with the 57-year-old which included a semi-final triumph last weekend.
"I'm so happy, I can't believe it," said Cadby. "My heart is beating so fast, that felt so good!
"I can't wait to play Phil again. He's the best there’s ever been so it's going to be another great test for me."
Taylor overcame a stern test from New Zealand's Cody Harris before claiming a 6-3 win to open his bid for the title.
Harris took out a 126 finish as he shared six legs with the Stoke legend, but Taylor pulled away with back-to-back 14-darters before landing tops to seal the win.
"It's a good start for me and Cody played well, but I've got another tough test on Saturday," said Taylor. "Corey's got a big future and I've got to know him a bit better over the last couple of weeks, and he's a good bloke."
Kyle Anderson's bid to follow up last weekend's Auckland Darts Masters triumph with another victory was ended with a first round exit to compatriot Simon Whitlock, who averaged an outstanding 107.69 in his 6-1 win.
Whitlock lay down a marker for his performance with a 122 finish in the opening leg, with Anderson taking out 71 to level only to see his rival hit three 14-darters in moving 5-1 up.
Whitlock then opened the seventh leg with two 180s, and though he was unable to complete a nine-darter he went on to take the leg in 12 darts to crown an impressive display.
Having lost out to Anderson in Auckland, Whitlock said: "I'm over the moon. I wanted to beat Kyle after last week and revenge feels good.
"We all have our ups and downs but it's how you bounce back. I'm starting to win tournaments again and show everyone that I’ve still got it in me.
"Australian darts is booming and it’s so good to see. I'm a proud Aussie and I love this game, I'm so happy we're all playing well and putting Australian darts back on the map."
Whitlock now faces James Wade, who punished 20 missed doubles from New Zealander Koha Kokiri before emerging with a 6-3 win from their clash in Melbourne.
After Perth-based Kokiri had landed a 180 in the opening leg, four missed doubles allowed Wade in to finish 104 for a key early break of throw, with the left-hander leading 2-0 and adding legs of 14 and 13 darts as he created a 4-2 cushion.
Kokiri took out 116 to pull back in leg seven, but missed eight darts at doubles to level the tie in the next as Wade escaped on double one before sealing the win with an 84 finish.
"It wasn't great but I'm through and that's all that matters," said Wade, a semi-finalist in Auckland last weekend.
"I want to play well every time I get up on stage but that isn't always possible. Today was about the win and I got it."
David Platt missed double 12 for a nine-dart finish before losing out to Michael Smith, who progresses to meet Wright in the quarter-finals.
A brilliant start saw Platt land double 12 to win the opening leg before opening the second with two 180s, and after landing a seventh treble 20 and the treble 19, he wired double 12 for what would have been only the second perfect leg in World Series history.
He returned to win the leg in ten darts, but Smith clawed his way back level before taking the lead at 3-2 with a classy 113 finish, and he also landed a 14-darter and double two to move 5-2 up.
Double top kept Platt's hopes alive, but Smith sealed victory by finishing 106 on double 16 to set up a quarter-final with Peter Wright.
"All these guys can play darts and David showed that," said Smith. "I wanted him to hit the nine-darter - it's great for darts when moments like that happen - and if anything it helped kick me into life.
"It was scrappy, it was a bit messy at times but I got the job done."
Number four seed Wright saw off Rhys Mathewson 6-2 in their tie, with the Australian qualifier unable to repeat the heroics which had seen him knock out Wade in Sydney last August.
Mathewson missed one chance to lead in the opening leg as Wright landed double 16, and the UK Open champion took the next four legs to move to the brink of victory.
Two missed match darts allowed the DPA ace to land double ten to stay in the game before he took out 118 to continue the revival, but two missed doubles in leg eight allowed Wright to finally complete the win on tops.
"I'm delighted to win but that was a nightmare - my scoring just disappeared," said Wright. "I have these matches every now and again where the scoring goes, but it doesn't last long.
"I need to get on the practice board and it will be okay for tomorrow - I'll be much better."
Top seed Gary Anderson needed a superb 170 checkout to break the resistance of TV debutant Justin Thompson before the two-time World Champion took a 6-2 win over the Australian qualifier.
Thompson took the game's opening leg and also squared the tie in the fourth before Anderson took out the highest possible finish to complete a 12-darter in moving 3-2 up.
Anderson then reeled off legs of 13, 13 and 11 darts to book his last eight spot with a strong 104 average.
"I started a bit slow but once I found the length they were flying in," said Anderson. "We've seen the boys over in this part of the world improve so much over the years we’ve been doing the World Series and you can't underestimate anyone."
Daryl Gurney produced a display of brilliant finishing to whitewash TV debutant Dave Marland 6-0 in the tournament's opening tie with six doubles from seven attempts to set up a tie with Anderson.
Marland - who owns a real estate business in Sutherland and won through the DPA Qualifiers - landed 180s in the opening two legs, but five missed doubles in the second to level gave Gurney a let-off which he punished in style.
The Northern Irish ace, the U.S. Darts Masters finalist last month, followed two successive tops finishes in moving 3-0 up with a trio of ton-plus checkouts for finishes of 132 on the bull, 110 and 100 to finish.
"The doubles were good tonight but the rest was a little bit off and it's not often I hit less 180s than my opponent," said Gurney.
"I knew he was a little nervous so I just had to try and be consistent, but I hope he enjoyed it up there."
Saturday's quarter-finals at the Hisense Arena (7pm start) will be followed on Sunday by the semi-finals and final as the inaugural Melbourne Darts Masters champion is crowned.
2017 Unibet Melbourne Darts Masters
Friday August 18
Daryl Gurney 6-0 Dave Marland
Peter Wright 6-2 Rhys Mathewson
James Wade 6-3 Koha Kokiri
Michael Smith 6-3 David Platt
Phil Taylor 6-3 Cody Harris
Corey Cadby 6-4 Raymond van Barneveld
Gary Anderson 6-2 Justin Thompson
Simon Whitlock 6-1 Kyle Anderson
Saturday August 19 (7pm local time)
Peter Wright v Michael Smith
James Wade v Simon Whitlock
Corey Cadby v Phil Taylor
Gary Anderson v Daryl Gurney
Best of 19 legs