Forsyth had seven birdies and a bogey for a two-round score of 128 on the 6,935-yard Royal Selangor Golf Club course. Miguel Angel Martin was second, one stroke back, after shooting a second-round-best 63 that included an eagle and six birdies.
Barry Lane, who had shared the first-round lead with Forsyth, had a 71 and dropped six strokes back at 134.
'I played really well and kept out of trouble,' Forsyth said. 'It started raining, and I had a 10-footer for an eagle but missed it.'
Faldo, who had opened with a 68, shot a 79 and missed the 141 cut by six strokes. He had bogeys on the first and seventh holes, double-bogeyed the ninth, then had five double bogeys on the back nine.
He blamed the heat and humidity.
'I felt terrible last night and felt terrible this morning,' Faldo said. 'You just feel full of water. I felt like a jellyfish. It was weird -- I just couldn't do anything.'
Anthony Kang was third at 131 following a 65, and Ignacio Garrido was another stroke back after a 67. Alex Cejka (65), Philip Golding (67) and Maarten Lafeber (67) were at 133.
Mike Cunning of the United States was in the group at 134 along with Lane, Arjun Singh, Stephen Leaney and Ricardo Gonzalez.
Michael Campbell shot a 66 and was seven strokes back, and Padraig Harrington had a 67 and was nine strokes behind.
Full-field scores from the Malaysian Open