SYLVANIA, July 19, 2014 (AFP) - Pace stood on 11-under 202 after 54 holes at Highland Meadows, level atop the leaderboard with US veteran Diaz, who fired a 71 in quest of her first LPGA victory since 2002.
South Korean Ryu So-Yeon and 20-year-old American Jaye Marie Green shared third on 203 with New Zealand's Lydia Ko fifth on 204.
Pace, an eight-time winner on the Ladies European Tour, hopes a strong showing will help her jump to the US tour.
"I definitely want to be in America. Hopefully this week will help me get here full time," Pace said.
"I'm very confident. I felt so relaxed today. It came naturally."
Pace birdied the third and ninth holes but stumbled with bogeys at 11 and 12.
She responded with birdies at the par-4 13th and par-3 14th and another at the par-5 17th.
"I like the greens," Pace said. "They are quite receptive to my shots. I'm confident about my iron play. I'm hitting it in there very well. Hitting really good."
Diaz, who led when the day began, birdied the third hole but followed with a double bogey at the fourth.
On the par-4 ninth, Diaz drove the ball eight feet beyond the cup and made the eagle putt, but took a bogey at 12.
Green, with her teaching-pro father serving as caddie, fired a 63.
"I actually dyed my hair last night. I don't know if that had anything to do with it," the brunette said.
Green opened with a birdie, added another at the par-3 sixth and closed the front nine with back-to-back birdies.
After a birdie at the 12th, Green took her lone bogey of the round at 14, then responded with four birides in a row and closed with par at the par-5 18th, needing only 25 putts to finish off the day's low round.
"I'm just going to hit driver on every hole tomorrow and go for everything," Green said. "I'm not going to think about it."
Green said that she made a return to basics in recent weeks after trying to pattern her game after US star Michelle Wie and world number one Stacy Lewis.
"I'm trying to get back to what 'Old Jaye' would have done," she said. "I was just trying to change my swing to be like Michelle Wie and putt like Stacy Lewis and I was changing everything. I was changing who I was. It wasn't me. I didn't know how to be someone I'm not."
Ryu ran off three birdies in a row, finishing at the par-5 17th, to fire a 68 and join Green one off the pace in Sunday's penultimate group.
Ko birdied the par-5 17th and 18th to close within two of the leaders.
Leading scores on Saturday from the third round of the LPGA Marathon Classic (USA unless stated, par-71):
202 - Lee-Anne Pace (RSA) 66-68-68, Laura Diaz 62-69-71
203 - Jaye Marie Green 72-68-63, Ryu So-Yeon (KOR) 68-67-68
204 - Lydia Ko (NZL) 67-67-70
205 - Austin Ernst 66-73-66, Mo Martin 67-71-67, Brooke Pancake 69-69-67, Katherine Kirk (AUS) 69-68-68, Cristie Kerr 70-67-68, Brittany Lang 70-66-69
206 - Kris Tamulis 73-69-64, Kelly Tan (MAS) 68-70-68, Mirim Lee (KOR) 71-67-68, Lindsey Wright (AUS) 67-70-69, Candie Kung (TPE) 70-67-69, Caroline Hedwall (SWE) 69-68-69, Kayla Mortellaro 69-67-70
207 - Ai Miyazato (JPN) 68-72-67, Brittany Lincicome 69-69-69, Marina Alex 69-69-69, Rebecca Lee-Bentham (CAN) 68-67-72
208 - Meena Lee (KOR) 72-70-66, Pat Hurst 71-70-67, Kim Kaufman 70-71-67, Choi Na-Yeon (KOR) 69-71-68, Juleita Granada (PAR) 68-72-68, Katie Burnett 67-73-68, Victoria Elizabeth 71-69-68, Stacy Lewis 70-70-68, Cindy Lacrosse 69-71-68, Belen Mozo (ESP) 71-68-69, Line Vedel (DEN) 71-68-69, Beatriz Recari (ESP) 70-68-70, Mariajo Uribe (COL) 67-70-71