Matthew, who is playing just 10 weeks after giving birth to her second child, bogeyed the third and fourth holes but recovered with three birdies to reach 4-under 212.
I hit a good 8-iron 10 feet short at the fifth, and made the putt (for birdie) so that settled me down, said Matthew, who turns 40 later this month.
Matthew took the lead after birdies on the 10th from 25 feet and the 13th from 12 feet. Giulia Sergas of Italy, who shared the overnight lead with Matthew, dropped to 11th after a 78.
Despite the lead, Matthew knows she needs another good round to secure her first major.
There are a lot of good players up there, she said. Christina had a good day, Shin will be tough and (Paula) Creamers up there.
Shin said she switched drivers after a 77 in the first round, but went back to her original on Saturday.
Today I was really good. Think the driver was good, everything was good, Shin said. Im following the leaders now. Im not far away. This course is very tough so I have a chance.
Song-Hee Kim of South Korea (74) and Mika Miyazato of Japan (69) were tied for fifth at 1 over.
Paula Creamer recovered from two straight 74s to shoot a 70 and climb to a share of seventh place.
Its kind of been up and down. My putter hasnt really been cooperating the way I would like, Creamer said. But today I made a lot of birdies and hit a lot of good irons.
Creamer played with Matthew in the first two rounds, and watched the leader follow up an eagle on the 11th with a hole-in-one on the 12th on Friday.
Yesterday was fun to watch, fun to be a part of, Creamer said. We had a little talk out on the fairway on No. 11 yesterday and then all of a sudden she took off. Thats pretty cool. Hopefully tomorrow I can chase her down, but she has done exceptionally well after coming back from giving birth.
Michelle Wie, who is trying to earn a spot on the U.S. Solheim Cup team, carded a 74 for a 7-over total of 223.
I just had some bad breaks out there today, said Wie, who had a difficult lie in a bunker at the 16th and ended up with a bogey 6. I thought it was lost. It was in the edge of the bunker, 6 feet under the ground. I could have made myself a little coffin in there.
Wie said she is still hoping to be picked as a wild card for the Solheim Cup team.
I think it would be a great honor for me to get picked, for me to make the team, to be part of that history, she said. But you know, Ill just go out there to shoot a real low score tomorrow and see what happens.