The Orlando-based Indian fired six birdies against a lone bogey to take his three-day total to 17-under 193, a good three strokes ahead of the chasing pack, at the Sedgefield Country Club.
Compatriot Jeev Milkha Singh, on the other hand, brought home a two-under 68 for the second successive day to drop nine places to tied 19th with a total of 10-under 200.
Atwal, who lost his PGA Tour card and had to win a qualifying tournament just to earn a spot here, shrugged off a fourth hole bogey and picked up birdies on the seventh and eighth hole to make the turn at one-under.
On his way back, he sank as many as four birdies at the 11th, 12th, 14th and 15th holes to stay at the top.
"I'm not your typical Monday qualifier," Atwal said.
"I've never won on the PGA TOUR, but I've won on almost every other tour I've played on. And I don't see why it's going to be different trying to win a tournament here. If I'm hitting it well, and I'm playing well (Sunday), I don't see why I can't win," said the 37-year-old.
Atwal has won on the European, Asian and Nationwide tours and is one round away from becoming the first qualifier to win the ensuing tournament since Fred Wadsworth at the 1986 Southern Open.
Atwal, who came up short on the money list after his minor medical exemption for his shoulder injuries ran out, said securing the card for 2011 is top-most on his priority list.
"I couldn't hit it out of my shadow when I came back. I just wanted to play, and I thought I'd be OK ... (Rushing back) was stupid, now that I look at it," Atwal said.
Scott McCarron (63), Scott Piercy (64) and Lucas Glover (67) were tied for the second spot at 14-under 196.