Thomas Levet finished alone in second place at 7-under-par 64 while Darren Clarke followed at 6-under-par 65. Patrick Sheehan was four shots off the lead after a round of 66.
'Today I read the greens well, I holed a couple and then all of a sudden I started reading the lines all the time and in they went,' said Lonard.
The 37-year-old continued his fine play on the back side with a birdie at the par-4 11th and another at the par-4 12th. Lonard then hit his approach to 2 feet at the par-4 13th and tapped in to make it three in a row.
Lonard played his third shot to 6 feet and converted the birdie putt at the par-5 15th. He knocked his second shot inside 10 feet at the par-4 16th and drained the birdie try to get to 10 under.
Lonard's tee shot at the par-3 17th landed near the hole, but his ball rolled 12 feet past. His birdie putt came up short and he walked away with a par before heading to the closing hole.
At the par-4 18th, Lonard missed the green to the left and chipped his third shot 16 feet past the hole. He then two-putted for bogey to miss the course record by a single stroke.
'I had the pleasure of missing the cut last year and having a weekend with the hospitality around here and got up to all sorts of mischief,' said Lonard. 'Hopefully this year I won't have the weekend off. It's a great golf course, you've got to hit a lot of great shots.'
Levet played the back side first and tallied three birdies and a bogey over his first nine holes. The Frenchman then caught fire on the front half with four consecutive birdies starting at the second to move to 6 under.
He found trouble with a bogey at the sixth, but countered with back-to-back birdies from the seventh to finish within two of Lonard.
Clarke birdied two of his first three holes and played his third shot to 8 feet for a birdie at the par-5 fifth. Clarke chipped in for a birdie at the par-3 seventh and hit his approach to 3 feet for a birdie at the ninth, making the turn at 5 under.
The 36-year-old from Northern Ireland birdied two straight from the 12th to jump to minus-7. He stumbled to a bogey at the 14th, but got that shot back with a birdie at the very next hole.
Clarke then missed an 8-foot par putt at the 16th en route to another bogey.
'I started swinging really well Sunday of last week,' said Clarke. 'Obviously it was far too late at that stage, but I felt as if I found something that was starting to work, and I just brought it on this week. It feels pretty good at the moment. I hope I can keep on doing it.'
David Frost, who owns the course record at Harbour Town, posted a 68 to join Jimmy Walker, Marco Dawson, Nick O'Hern and Cameron Beckman in a tie for fifth. Five-time champion Davis Love III was one shot further back in a group at 2-under-par 69.
Defending champion Stewart Cink had a birdie and a bogey for a round of 71.