Jerry Kelly posted a 3-under 67 to move into second place alone at 9-under-par 201.
Overnight leader Tiger Woods carded an even-par 70 to finish one shot further back at 8-under-par 202 along with Deane Pappas, who shot a 4-under 66 on Saturday.
Garcia, who displayed some of his old fiery form during the final round at the Masters last month, got off to a quick start on the TPC at Four Seasons with a birdie at the par-4 third.
He bogeyed the next, but Garcia came back with another birdie at the par-3 fifth. At the par-4 sixth, Garcia dropped his second shot inside 3 feet and converted the short birdie putt to reach 8 under.
Garcia first grabbed a share of the top spot at the par-4 12th when he played his approach within a few feet of the hole.
The young Spaniard, who was shooting for the flags all day, knocked his tee shot inside 5 feet for a birdie at the par-3 13th and ran home the putt to break away from the pack.
'I gave myself a lot of birdie chances,' said Garcia. 'I hit a lot of greens.'
Garcia then gave himself a bit of a cushion at the 17th as he hit his tee ball to 9 feet for his sixth birdie of the day.
The 23-year-old has only held the 54-hole lead on the PGA Tour on one previous occasion and he took full advantage with a three-shot win at the 2001 Buick Classic.
'I haven't played as well as I did today, but I've been close to the way I played today,' said Garcia, who is seeking his fourth career victory on the PGA Tour. 'I feel good about it. I think that if I keep this momentum going into tomorrow and keep the same game plan it should be fun.'
Woods, who had an ominous start to his round that was reminiscent of the 75 he shot last Saturday at the Wachovia Championship, shook off a pair of early bogeys with birdies at the seventh and the ninth.
The 28-year-old grabbed a share of the lead briefly with a birdie at the par-4 11th after his approach stopped within 6 feet of the hole.
At the par-4 12th, Woods nearly broke his 9-iron in two hitting out from behind a tree and managed to reach the green 13 feet of the cup. He failed to make birdie, however, and dropped a shot with a bogey at the par-4 14th after an errant drive almost found the water.
Woods continued to struggle off the tee down the stretch but kept coming away with scoring opportunities thanks to some incredible iron play.
'I need to be in the fairway more,' said Woods.
The top player in the game was unable to pick up a birdie over his last four holes, but parred his way in to remain in contention.
'Going out there and being so close to putting it all together, it's frustrating because I feel like I'm only a few swings away,' said Woods, who won this event in 1997. 'It might be tomorrow.'
While the likes of Woods and Garcia were battling it out, Kelly used a quiet round to move into second place alone.
Kelly tallied his first birdie at the second and hit his second shot to 12 feet for a birdie at the eighth.
He added a birdie at the par-5 16th en route to a bogey-free round.
Defending champion Vijay Singh rocketed to the top of the leaderboard with four birdies on the front nine, including three straight from the sixth, but struggled coming home.
Singh bogeyed the 11th and the 12th and parred in for a round of 68. He was joined by Mark O'Meara, Dudley Hart, Briny Baird, Duffy Waldorf and Luke Donald in a tie for fifth at 7-under-par 203.