Lara sunk nine birdies to finish with a 6-under 65, matching Dodd’s earlier effort Thursday on the Donnafugata Golf Resort & Spa course.
The 33-year-old Lara was in danger of losing his tour card six months ago but then won the Austrian Open in September.
“It changed everything for me,” Lara said. “Before I won there I thought I was going to lose my card and didn’t know what I was really going to do but after winning there I have been able to look to the future.”
Dodd combined six birdies with two bogeys before a late eagle on the par-5 16th.
The 44-year-old Dodd has won three times on the European Tour, although his last victory came in 2006.
“I did a lot of good things out there today,” Dodd said. “I kept in play most of the time, hit some good iron shots and I putted well which is always key for any good round.”
Raphael Jacquelin of France and Anthony Wall of England were one shot behind the leaders, with Chris Wood, Steve Webster, Daniel Gaunt and Matthew Zions each at 4-under.
Last year’s winning Ryder Cup captain Colin Montgomerie put himself into contention with a 2-under 69, while 1999 British Open winner Paul Lawrie shot a 1-over 72.
With neither Francesco and Edoardo Molinari nor Matteo Manassero on hand, the most recognizable Italian competing is 54-year-old Costantino Rocca, who shot a 2-over 73.
Rocca and other Italian players wore red-white-and-green ribbons attached to their caps to celebrate the 150th anniversary of Italy’s unification.
This tournament marks the first European Tour event of the year on European soil.