Woods put himself in danger of missing the cut for the first time in a major, making four bogeys -- including three in a row -- and two birdies in his front nine to fall three shots above the projected cut line for the low 70 and ties.
But Woods, who won this tournament in 1999 and 2000, made three birdies in a five-hole stretch to get to 4 over, the cut number.
After a par on 16, he went for the green in two on the 650-yard 17th. His fairway wood kicked into a greenside bunker and a terrible lie. He was able to get it out into heavy grass, flopped out to 15 feet and missed the par putt, dropping back to 5 over.
Needing a birdie on the 550-yard closing hole to stay around, Woods hit his second shot onto the green from 196 yards and two-putted to finish a 1-under 69 and get back to 4 over.
``I got through somehow,'' he said. ``I grinded it out the best I could all day.''
Mickelson was one of six players to shoot a 67 in the opening round and another 11 players were one stroke back. After two rounds, Mickelson was at 8-under 132, three shots in front of Jerry Kelly, who matched his 65 as the best rounds of the tournament.
Rory Sabbatini, who had a 69, and Davis Love III and Lee Westwood, who had 68s, were at 136.
Mickelson opened his second round with a 5-under 31 on his front side, capped by an 18-foot eagle putt on the 550-yard 18th at the 7,392-yard Lower Course at Baltusrol Golf Club.
He also had seven birdies, two bogeys and a double-bogey in the round.
``What I was most proud of today was that when I did make a mistake I let it go,'' he said. ``When I made the double on 1, I came back with birdies on 3 and 5. I bogeyed 6 and birdied 8. I let go of some bad shots, forgot about it and moved on.''
Mickelson, the 2004 Masters champion, hasn't had a great year in the majors. He was 10th in the Masters, tied for 33rd in the U.S. Open and tied for 60th in the British Open.
``I did the same thing I did preparing for this week as I did for the previous three majors this year and all four last year,'' he said. ``I'm feeling very confident after the first two rounds but there's a lot of golf left.''
Woods opened his second round with a 5-foot birdie and appeared to be off to a hot start until a three-putt bogey from 8 feet on the second hole. Then came a drive behind a tree that led to a bogey, and a tee shot that found the water on the par-3 4th. Woods had to make a 12-footer to save bogey.
He birdied No. 6, but missed a 6-foot par putt on 8 to fall back to 7 over, 15 shots behind Mickelson.
Woods started this tournament looking to win three majors in one year for the second time in his career; the first time he did it was 2000, matching Ben Hogan's feat in 1953.
His record overall cut streak ended in May at 142 consecutive tournaments when he missed the cut at the Byron Nelson Classic.
Defending champion Vijay Singh followed his opening 70 with a 67 that left him among the contenders entering the weekend.
This year, Woods won the Masters and British Open and was second in the U.S. Open.
Woods had three brushes with the cut in majors since turning pro, including last year's PGA when he made it by two after an opening 75. He made the cut by one stroke in the 2001 PGA, and he finished on the number at the 2003 Masters.
Mickelson was going low despite missing fairways off the tee.
His first birdie was from 4 feet on No. 11 and his second, on No. 13, was a foot closer but came after a great shot from a fairway bunker.
That was the shot that got the gallery going and they started to get behind the left-hander.
Mickelson made a birdie on No. 14 after hitting into the left rough off the tee. His lone bogey of the nine was on the 16th when he missed a 5-foot par putt after hitting into a bunker.
He ended the nine with a flourish on the closing par-5s, the only two on the course.
He hit a sand wedge to 15 feet with his third shot on the 650-yard 17th, and then closed with the eagle.
Mickelson had a double-bogey 6 to open his second nine when he drove into the left rough, hit an 8-iron short of the green and then fluffed a chip shot from heavy grass.
He made up for half of that two holes later when he dropped a 40-foot birdie putt on No. 3. His last birdie of the day was a 25-footer on No. 8. That gave him five birdies putts of at least 25 feet in the opening 36 holes.
``I'm entering the last two rounds with more confidence than I've had in a while,'' Mickelson said.