Wilhelm Schauman carded a 5-under 67 to move into second place at 9-under-par 135. Christopher Hanell and Paul McGinley share third place at 7-under-par 137.
Donald opened on the back nine at Barsebck Golf & Country Club and started quickly with birdies at the 11th and 12th. The Englishman rolled in his third birdie at the par-5 16th and came right back to birdie the 17th to move to minus-7.
The 26-year-old then birdied the par-4 second. Donald coasted to four pars in a row before a birdie at the par-4 seventh got him to minus-9.
Donald, who won the 2002 Southern Farm Bureau Classic on the PGA Tour, closed his bogey-free round with a birdie at the par-5 ninth.
'I played very similarly to the way that I did Thursday, I just got more of the putts to roll in for me today,' said Donald. 'I am hitting the ball as well as I have been all year at the moment, golf seems an easy game when you are hitting fairways, hitting greens and making putts and I got on a bit of a roll out there today.'
Donald has a bigger prize in mind, other than just winning this tournament. He is shooting to make the European team for September's Ryder Cup.
'I think this course suits my game and the weather and conditions were just perfect today and I thought that it would be possible to reach double figures today given those conditions,' said Donald. 'I knew that 6 or 7 under for the day was do-able. I would love to win here, any win is great, and I don't think that it would do my Ryder Cup chances any harm.'
Schauman, a sponsor's invite this week, also began on the second nine and he started with consecutive pars to open his round. The Swede then caught fire.
He dropped in a birdie at the par-5 12th and came right back to birdie the very next hole to get to 6 under. Schauman capped a run of three straight birdies as he also birdied the 14th.
He stumbled to a bogey at 15, but responded with an eagle at the par-5 16th. Schauman dropped another stroke on 17 before posting four pars in a row around the turn.
Schauman dropped in back-to-back birdies from the fourth to get to 9 under. He parred his final four holes to remain in second place.
David Howell and Johan Edfors, the overnight co-leaders, each posted rounds of 1-under 71 to move to 6-under-par 138. He shares fifth place with Henrik Stenson (70) and Peter Hanson (66). Simon Khan and Jesper Parnevik are one stroke further back at minus-5.
Adam Scott, the defending champion, shot a 1-under 71 to get to 1-under-par 143. He shares 33rd place.
The cut line fell at 2-over-par 146 with 73 players moving on to the final two rounds.