Cross looked on course to continue the defence of the crown he won during his maiden appearance at Alexandra Palace last year when he surged into a 2-0 lead.
But Humphries staged a stunning comeback to cause an upset by recording a 4-2 victory for the biggest win of his career so far.
The 23-year-old, who will face Michael Smith in the quarter-finals, told Sky Sports: "People don't think I can win this but I say I can, I take a lot of inspiration from Rob.
"If you want to be world champion you don't give up. That showed a lot about my game and a lot of character to knock out a person who has never lost on that stage.
"It's all about the fightback and if you want to be world champion you have got to do that. I am hugely proud of myself for coming back and for the way I played in those last four sets."
Cross failed in his bid to become the first person to defend the title after winning it at their first attempt.
He reflected on what he called a tough year but he feels he will come back strong again in 2019.
"I'm obviously disappointed. I felt a bit fatigued, to be honest. At 2-0 up I came back out and I didn't feel anything, but fair play to Luke he played great," said Cross.
"I don't think my scoring was great all the way through, the 100-plus finishes were keeping me in the game and without those I would have lost 4-0.
"This is going to hurt and I will bounce back next year. That's the monkey off my back now.
"This year has been tough and probably the hardest learning curve I have ever had in my life. I will go and enjoy a normal life now away from darts and if I can do that then I will be fine next year."
Also in the evening session, Smith hit 10 maximums and three 100-plus checkouts en route to beating Ryan Searle 4-1, while Dave Chisnall set up a quarter-final clash against Gary Anderson after a 4-0 whitewash of Jamie Lewis.
James Wade went out earlier in the day. The ninth seed had led 3-2 but, despite missing a total of 10 darts to take the match, it was the world number 78 Ryan Joyce who eventually won 4-3 to set up a last eight meeting with Michael Van Gerwen.