MILAN, September 21, 2013 (AFP) - The 35-year-old Fraser carded a bogey-free round of 68 for a three-round total of 205 and 11 under for the event.
Francesco Molinari, playing on the Turin course where he has been a member since he was eight, shared second place with Ryder Cup teammate Nicolas Colsaerts of Belgium and Sweden's Joakim Lagergren.
"It's similar to what I grew up on before I moved to Melbourne," said Fraser in praise of the Turin lay-out.
"I grew up on a very tight, tree-lined golf course with tiny little greens and the emphasis was on getting it in play and hitting little shots around the greens and that's exactly what this demands. I think it's a brilliant golf course and wish we could play it every week of the year."
Molinari began the day tied for the lead and got off to the ideal start with a birdie on the par five opening hole.
But a run of seven pars was then followed by a bogey on the ninth.
The 30-year-old could only manage one birdie, on the 14th, on the back nine to complete a 71.
Asked about the enormous amount of support he has been receiving all week, Molinari added: "It's crazy. I haven't seen that many people here in Italy ever.
"It's fantastic and they are all rooting for me. Maybe today they weren't as happy as the first two days but I will try to give them some more joy tomorrow."
Leading third round scores from the Italian Open on Saturday at the Golf Club Torino (GBR/IRL unless stated, par 72):
205 - Marcus Fraser (AUS) 66 71 68
206 - Francesco Molinari (ITA) 68 67 71, Nicolas Colsaerts (BEL) 65 71 70, Joakim Lagergren (SWE) 72 67 67
207 - Felipe Aguilar (CHI) 69 66 72, Simon Thornton 68 67 72
208 - Ricardo Gonzalez (ARG) 65 73 70, Hennie Otto (RSA) 71 67 70
209 - Steve Webster 67 69 73, Maximilian Kieffer (GER) 65 72 72, Matteo Manassero (ITA) 70 70 69, Renato Paratore (ITA) 72 66 71, Scott Hend (AUS) 72 71 66, Romain Wattel (FRA) 71 72 66, David Higgins 67 69 73, Bernd Wiesberger (AUT) 69 72 68, Julien Quesne (FRA) 70 68 71
210 - Jaco Van Zyl (RSA) 70 69 71, Seve Benson 68 70 72, Johan Edfors (SWE) 69 70 71, Emiliano Grillo (ARG) 70 72 68, Fabrizio Zanotti (PAR) 71 70 69, Alejandro Canizares (ESP) 71 67 72, Mark Foster 74 65 71, Christopher Doak 74 67 69
211 - Robert Jan Derksen (NED) 71 69 71, Magnus A Carlsson (SWE) 72 71 68, Jorge Campillo (ESP) 68 73 70, Matthew Baldwin 71 68 72, Alvaro Quiros (ESP) 71 67 73, Scott Jamieson 72 69 70, Simon Wakefield 70 73 68, Richard Finch 68 74 69, Fredrik Andersson Hed (SWE) 73 67 71
Selected:
213 - Jose-Maria Olazabal (ESP) 71 68 74, Robert Allenby (AUS) 71 72 70
214 - Thomas Aiken (RSA) 69 71 74, James Kingston (RSA) 68 71 75, Justin Walters (RSA) 70 73 71
215 - Garth Mulroy (RSA) 71 72 72
216 - Retief Goosen (RSA) 70 72 74