TURIN, August 29, 2014 (AFP) - The 38-year-old South African carded an incredible 10-under-par 62 to surge into the lead having started the day a shot behind Italian Francesco Molinari and Bernd Wiesberger of Austria.
But following a miserable opening round 72, Scotland's Stephen Gallacher gave his Ryder Cup chances a boost with a 65.
He needs to finish in the top two in order to overtake Graeme McDowell and earn an automatic spot on the European team at Gleneagles next month.
Having begun the day six shots off that position, he clawed back a shot on second-placed Wiesberger.
But before he even started his round he admitted the leader board -- on which Otto and Wiesberger had already come home -- made depressing reading.
The South African was 15 under par with Wiesberger at 12-under and Gallacher sitting on par.
"When you tee it up 15 and 12 behind, you know you're going to have to be more aggressive and make some birdies so I was delighted to shoot 65 with a double bogey in the end," said Gallacher, who is now joint ninth.
"I don't think I could say on air what I was thinking when I saw the leaderboard at lunch. It was a strange feeling.
"I was looking at the guy who was second to be honest to try and catch him up a bit and a couple more 65s at the weekend and we will see what happens.
"There are two more rounds and a lot can happen in golf. Just to be in with a shout on Sunday is all you can ask."
Otto came close to making history with the first sub-60 round on the European Tour but needing to birdie the last three holes, a bogey on 17 scuppered that chance.
Even so, he is well placed to repeat his Italian Open victory from 2008 in Milan.
"It's always special to shoot a 62 but a 59 never even crossed my mind," said Otto.
Collated second round scores in the Italian Open at Circolo GC on Friday (par 72) (x denotes amateur, GBR unless stated):
129 - Hennie Otto (RSA) 67-62
132 - Bernd Wiesberger (AUT) 66-66
135 - Ross Fisher 69-66
136 - Richie Ramsay 67-69, David Lipsky (USA) 69-67, Morten Orum Madsen (DEN) 68-68, Rafael Cabrera Bello (ESP) 73-63, James Morrison 70-66
137 - Felipe Aguilar (CHI) 68-69, Stephen Gallacher 72-65, Soren Hansen (DEN) 71-66, Joost Luiten (NED) 69-68, Mikko Korhonen (FIN) 70-67, Darren Fichardt (RSA) 68-69, Seve Benson 70-67
138 - Francesco Molinari (ITA) 66-72, Carlos Del Moral (ESP) 70-68, Richard Bland 67-71, Edoardo Raffaele Lipparelli (x) (ITA) 68-70, Maximilian Kieffer (GER) 68-70, Lee Slattery 70-68, Thomas Pieters (BEL) 70-68
139 - Merrick Bremner (RSA) 71-68, Robert Rock 69-70, Marc Warren 69-70, Benjamin Rusch (x) (SUI) 73-66, Andreas Harto (DEN) 70-69, Simon Dyson 71-68
140 - Peter Whiteford 73-67, Gareth Maybin 67-73, David Howell 73-67, David Horsey 71-69, John Hahn (USA) 67-73, Tom Lewis 71-69, Francesco Laporta (ITA) 68-72, Daan Huizing (NED) 69-71, Jason Knutzon (USA) 70-70, Joachim B Hansen (DEN) 69-71, Peter Hanson (SWE) 71-69, Adrien Saddier (FRA) 70-70, Ricardo Gonzalez (ARG) 74-66, Gregory Molteni (ITA) 70-70, Edoardo Molinari (ITA) 71-69
141 - Roope Kakko (FIN) 69-72, Filippo Bergamaschi (ITA) 72-69, Estanislao Goya (ARG) 71-70, Kristoffer Broberg (SWE) 73-68, Marcel Siem (GER) 73-68, Shiv Shankar Prasad Chowrasia (IND) 69-72, Oliver Fisher 74-67, Anthony Wall 71-70, Alessandro Tadini (ITA) 72-69, Romain Wattel (FRA) 73-68, James Heath 73-68, Fredrik Andersson Hed (SWE) 74-67, Alexander Levy (FRA) 73-68
142 - Sihwan Kim (KOR) 70-72, Thomas Aiken (RSA) 69-73, Damien McGrane 71-71, Jorge Campillo (ESP) 71-71, Garrick Porteous 71-71, Matteo Manassero (ITA) 73-69, Andrew Sullivan 70-72, Tommy Fleetwood 72-70, Eduardo De La Riva (ESP) 72-70, Wade Ormsby (AUS) 74-68, Nacho Elvira (ESP) 75-67, Lucas Bjerregaard (DEN) 74-68, Craig Lee 70-72, Shiv Kapur (IND) 73-69, Adam Gee 72-70, Magnus A Carlsson (SWE) 72-70, Daniel Im (USA) 71-71, Darren Clarke 72-70, Alvaro Quiros (ESP) 70-72, Simon Khan 72-70, David Drysdale 73-69, Sam Walker 70-72