Djokovic triumphed 6-3, 6-4, 5-7, 7-5 but had to save two break points midway through the fourth set before seeing off the challenge of the world number 277.
"I had never seen him play so there is always the element of surprise," admitted Djokovic.
"He had nothing to lose and served well. I was a little lucky in the fourth set. I could have won the match in three and it could have gone to a fifth.
"The way he was playing, I'm glad it didn't."
The 37-year-old Djokovic had cruised through the first two sets on Centre Court against a player who was making his Grand Slam debut this week.
He was a break up in the third to lead 3-2 but Fearnley, who was still playing university tennis in the United States last month, retrieved the break immediately.
He then rode the momentum to claim the third set.
Fearnley forced the 24-time Grand Slam champion to save two break points in the sixth game of the fourth set.
Djokovic made the Briton pay for his failure to convert the advantage and gained a final crucial break in the 11th game before serving out the match.
"I didn't really feel comfortable in my own skin in the third and fourth sets," said Djokovic.
"But sometimes you have rough days when you don't feel your best. It's a win and I'll take it."
Djokovic fired 34 winners past Fearnley, whose 42 winners were cancelled out by an unforced error count of 49.
World number two Djokovic will take on Australia's Alexei Popyrin for a place in the last 16.
