SYDNEY, November 12, 2011 - The Australian 2006 champion carded an eagle two and seven birdies to charge to the top of the leaderboard on 12-under 204, one shot ahead of compatriot Jason Day.
Former world number one Woods had a frustrating day, starting as the overnight leader but falling behind after bogeying his opening three holes and never recovering.
The 14-time major winner slumped to three-over 75 to lie six shots behind the lead on six-under 210 heading into Sunday's final round.
Australian left-hander Greg Chalmers was in outright third spot on 10-under after a five-under 67, ahead of compatriot Nick O'Hern (69-72-66) and American Nick Watney (66-73-68) on nine-under.
Senden, 40, who has five professional tournament victories including the 2006 John Deere Classic in Illinois, finished in style with a curling 30-footer downhill at the last hole to cap a magnificent round.
"It was a good day, I kicked it off with that birdie at five and holed that pitching wedge from 100m for an eagle at the sixth so that put me in a good frame of mind heading to the turn," Senden said.
"I had a good season in America and a good run of tournaments through Malaysia and Shanghai last week, so I came into this tournament with some momentum.
"It's our national Open, and it's more special being a winner back in 2006, and I feel happy and comfortable at this event and I'll see what happens tomorrow."
Senden made only 23 putts and missed only three greens in a blistering round, the opposite of Woods.
The American made a faltering start, bogeying his opening three holes to slip to six-under before he holed a four-footer for birdie at the fourth.
"I made nothing today. I couldn't get any momentum. Any time I hit the golf ball in there stiff I'd miss it and it kept happening again and again," Woods said.
"The round should have been easy 71 no problem, I played the par-fives bad and I didn't take care of 13, I was probably over-thinking on the greens a little bit.
"I need to play good solid front nine and get some momentum going on tomorrow's back nine, then hopefully I can put myself into position and then I'll be right there."
Woods, who has not won since the 2009 Australian Masters and has seen his world ranking tumble to 58, looked to have recaptured some form with Friday's five-under 67 but he struggled with his putter into the weekend.
He angrily swung his club when he hit into the trees off the 11th tee, indicating that he was out of sorts.
Day, the runner-up at this year's Masters and US Open, hung in behind Senden to claim second spot with a round of five birdies and a bogey at the 15th.
He hit a superb approach to the fifth hole and holed a six-foot putt for birdie, made another birdie at the eighth and then sunk a 30-foot birdie putt on the next hole, to a huge roar from the home gallery.
Day, who celebrated his 24th birthday Saturday, took the outright lead again at the 13th with his fourth birdie before he was reeled in by Senden.
"Obviously, it was a really good day today, a nice solid round and I'm very happy with the position I'm in for tomorrow," Day said.
"I'm in the final group, which is nice. It's been a while since I've been back (home) so hopefully I can come back and put on a good show for the crowds tomorrow."
Watney was the pick of the American contingent, preparing for next week's President's Cup against the Internationals at Royal Melbourne.
World No.12 Watney grabbed eight birdies offset by four bogeys in his 68, while 17th-ranked Bubba Watson had a 72 and is joint eighth with Woods.
Leading third round scores from the $1.54 million Australian Open at The Lakes Golf Club (par 72) on Saturday (Australian unless stated):
204 - John Senden 70-71-63
205 - Jason Day 69-68-68
206 - Greg Chalmers 67-72-67
207 - Nick O'Hern 69-72-66, Nick Watney (USA) 66-73-68
208 - Ryan Haller 70-73-65, Jarrod Lyle 65-74-69
210 - Bubba Watson (USA) 68-70-72, Tiger Woods (USA) 68-67-75
211 - Aaron Baddeley 73-71-67, Kyle Stanley (USA) 72-72-67, Nicholas Cullen 72-70-69, Adam Scott 69-71-71, Peter O'Malley 70-66-75
212 - Paul Sheehan 69-72-71, Fred Couples (USA) 67-74-71
213 - Kelly Kraft (USA) 71-74-68, Steven Jones 67-76-70, Marcus Cain 73-71-69, Stephen Allan 69-74-70, Rohan Blizard 69-70-74, Matthew Jones 69-70-74
214 - Terry Pilkadaris 71-74-69, Craig Hasthorpe 69-75-70, Geoff Ogilvy 70-74-70, John Cook (USA) 69-74-71, Choi Joon-Woo (KOR) 73-67-74, Scott Arnold 71-71-72, Matthew Millar 68-73-73
Selected scores:
215 - David Toms (USA) 72-73-70, Bill Haas (USA) 72-71-72
216 - Dustin Johnson (USA) 66-75-75
218 - Greg Norman 71-74-73