Kevin Stadler, who has won two times this season, posted a matching 67 to move into second place at 17-under-par 199. Scott Petersen carded a 70 to take third place at minus-15. Jeff Freeman, Bobby Gage and Troy Matteson are one stroke further back at 14-under-par 202.
Nallen wasted no time getting in red figures in his third round as he birdied the first. He climbed to minus-20 with a birdie at the par-4 fourth.
'The birdie at one got me going,' Nallen said. 'I made a 25-footer and that settled me down a bit.'
The 22-year-old stumbled to a bogey at the par-3 sixth. However, Nallen came right back with a birdie on seven. He faltered to another bogey at the ninth at Whirlwind Golf Club's Cattail Course.
Nallen atoned for that error with back-to-back birdies from the 12th to move to 21-under. After parring his next two holes, the University of Arizona product drained a birdie putt at the par-4 16th.
He came right back to birdie the next to move six clear of the field and match the largest 54-hole lead in Nationwide Tour history.
'There is pressure, but it's a good pressure. You want to do as well as you've been doing, but not make any stupid mistakes or big numbers,' said Nallen. 'If I get into trouble I just try to get out, hit a good shot and save it. Tomorrow I'll just try to keep making birdies.'
Nallen is looking to make a bit of history. He is a Monday-qualifier playing in his first Nationwide Tour event. There have been 16 Monday-qualifiers that went on to win a Nationwide event and nine others have won in their first start. However, no player has won as a Monday-qualifier in his first career start.
Stadler bogeyed the first, but came right back with a birdie at two. He picked up a birdie at the seventh to make the turn at minus-13.
Stadler, the son of Champions Tour player Craig Stadler, ran off four consecutive birdies from the 10th to jump up the leaderboard. He tripped to a bogey on 14, but birdied the last to take second place. However, he knows he's got his work cut out for himself in the final round.
'I don't expect to catch him,' Stadler said. 'He shot 60 the first day so that means I have to shoot 55 or something ridiculous. Obviously, I'm going to have to shoot something really low, but at the same time he's shot lights out for three days in a row. He'll be tough to catch, but I have a tiny, tiny chance.'
Jason Schultz (65), Brent Schwarzrock (69), Kenneth Staton (70), Matthew Jones (69), Scott Gutschewski (71) and Brad Ott (69) share seventh place at 13-under-par 203. Chris Anderson and Ben Bates are one stroke further back at minus-12.