Diaz had a 36-hole total of 5-under 139 on the Barseback course in southern Sweden, where Sorenstam helped Europe win the 2003 Solheim Cup over the United States. Brittany Lincicome (69) was next at 140.
Sorenstam, the three-time defending champion, shared 14th place at 146 with nine others.
'This was not fun at all,' she said. 'I felt fine on the range, but on the course it didn't work. I'm really disappointed.'
Diaz had two bogeys on the front 9, but the American finished her round with a birdie on the 18th -- her fourth birdie of the day.
'I seemed to hit more greens today than yesterday, but I wasn't able to make some putts,' said Diaz, who is in contention for the Solheim Cup that will be played next month on another Swedish course.
Lincicome had six birdies -- matching Suzann Pettersen for most birdies of the day -- but the American also had three bogeys.
Paula Marti of Spain (69), amateur Caroline Hedwall of Sweden (72) and Jade Schaeffer of France (72) shared third at 142. Pettersen, a Norwegian who won her first major this year at the LPGA Championship, had a 68 for the day's best score and was at 143 with Sweden's Louise Stahle.
First-round leader Minea Blomqvist of Finland was at 144 after a 76.