Ahn's two-round total of 12-under 132 put her on track for her first win outside South Korea. She had five birdies but bogeyed the 18th in windier conditions at the Royal Pines resort to give her a one-shot lead over Australian Michelle Ellis, who had a second-round 66.
'I had a lot of chances to make birdie but I didn't make them,' Ahn said. 'I love this course, but I hate the wind.'
Ellis, a former regular on the LPGA Tour, nearly had a hole-in-one on the par-3 fifth, her tee shot rolling around the cup before popping out and leaving her a tap-in birdie. She bogeyed the eighth but birdied the ninth, her final hole, to pull within one of Ahn.
Lotta Wahlin of Sweden is in third place after a 67 Friday, three strokes behind Ahn, followed another stroke back by Australian Tamie Durdin (69), and South Korean Shin Ji-yai, whose 66 tied her with Ellis for the best round of the day.
Karrie Webb, who won last week's Australian Open at Royal Sydney, was making a charge, moving to 6-under before taking a double bogey on the par-5 12th.
She recovered for a 68 after making birdie on 18 and sits at 4-under 139, seven shots back of Ahn.
Amy Yang, an Australian-based South Korean who won the tournament last year as a 16-year-old amateur, shot a 75 Friday, missing the cut of even par by two strokes.
American Cristi Kerr, making her first start of the year, is tied for ninth after her second straight 69 and is six shots off the lead.
The big-hitting Wahlin's 67 was only the third time she's shot that score in a tournament. The second-year European Tour player, who said she was inspired to take up golf due to Annika Sorenstam's exposure in Sweden, missed the cut at Royal Sydney last week but said she prefers the Royal Pines layout.
'I am just using wedges on most of the holes,' said Wahlin, adding that she could reach most of the par-5s in two shots.
Three-time former champion Laura Davies and American star Natalie Gulbis both shot a 73 in the second round and are at 2 under, 10 behind Ahn. The popular pair played in back-to-back groups and attracted the largest crowds of the day.
Gulbis, playing in Australia for the second straight week after finishing 15 shots behind Webb at the Australian Open, bogeyed three of four holes during one stretch, including a three-putt on the par-3 fifth.
While her mother, Barbara, watched and frequently took photos of the black swans that inhabit the waterways around Royal Pines, Gulbis continued to have problems on the greens, alternately leaving her putts short or well past the hole.
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