Karlsson had three birdies on the front nine and finished at 8-under 136. First-round co-leader Jean Francois Lucquin of France was one back after a 71.
It is a much better feeling to slide into next week knowing that I can play well, said Karlsson, one of four Europeans using the tournament to warm up for next weeks Ryder Cup at Valhalla in Kentucky.
Defending Mercedes champion Soren Hansen of Denmark, also on Europes team, had 10 birdies in a 67 that had him in fifth place four strokes off the pace. Teammates Miguel Angel Jimenez of Spain (73) and Graeme McDowell of Northern Ireland (73) were both nine shots back.
Peter Hanson of Sweden (69) was third at 138 and Richard Finch of England (73), the other first-round leader, was another shot behind in fourth.
Hansen, attempting to become the first player to retain the Mercedes title, had birdies on his first five holes and six out of his first seven. He shared fifth with Marcel Siem of Germany (68) at 140.
American John Daly was eight shots back after a 71.
Patchy fog delayed the beginning of the round by 30 minutes and the players had to battle with pouring rain throughout the morning and early afternoon.