Kyrgios has one of the deadliest serves in the game but is often criticised for his mentality.
The Australian Open home favourite has openly admitted he is “bored” with playing tennis and frequently gets criticised for ‘tanking’ during matches.
It is suggested Kyrgios has the potential to challenge for Grand Slam titles.
And when Federer was quizzed on if the 23-year-old will ever fulfil his potential, the Swiss star was unimpressed.
“I get asked every time and I’m tired of answering the question,” Federer told Age News.
“I like Nick, look at the end of the day and I think he’s a wonderful player and he’s got incredible shots and he knows that, we all know that.
“It’s just a question of how much he wants it. It’s up to him to decide how he wants to go about it.”
Federer is gearing up to begin his Australian Open defence on Monday.
The world No 3 has been handed a favourable schedule by playing at night.
But he knows the difficult task at hand, especially with the form of his rivals.
“Last year I also came in not expecting to defend again,” he said.
“In a way I also feel again, you know, it’s totally up for grabs again.
“I don’t think you can put me massive favourite. If you can put anybody as a big favourite, I think it would be Novak [Djokovic] – or Rafa [Nadal] if he’s, you know, fully fully fit.
“You know, but only the first couple of matches will show where his level’s at.
“To my side, I just hope to be in the mix when it comes down the stretch.”