He was at 11-under 202, with Scotlands Colin Montgomerie (68) and Denmarks Soren Hansen (67) sharing second place.
I hit the ball great, Larrazabal said. I missed only two or three fairways.
Montgomerie, who won the French Open in 2000, was disappointed about dropping two strokes in the last four holes on Le Golf Nationals Albatross Course.
But Ive given myself a chance, he said.
Hansen climbed from eighth place and was satisfied with his game.
I made a few mistakes on 15 and 17, he said. Otherwise, it has been a very good day.
Englands David Lynn, who was tied with Larrazabal after two rounds, had a 71 and was four strokes off the pace. He was even with countryman Lee Westwood, who shot a 69.