Dunlap, in his first full season on the Champions Tour, birdied five of his final seven holes for a two-day 12-under 132 at the TPC Snoqualmie Ridge course.
He leads by one stroke over Doug Garwood, who shot a 6-under 66 for a two-round 11-under 133.
Tommy Armour III and Mark Brooksare tied for third at 9-under 135.
Six of the top seven players are seeking their first Champions Tour victory.
Dunlap has never led entering the final round in the PGA Tour, the Web.com Tour or the Champions Tour.