Reid, a rookie from England, eagled the last two holes for a 66. Sorenstam, in her final tournament in Europe, shared second place with Martina Eberl of Germany (73).
Reid, who finished runner-up twice on the Ladies European Tour this year, totaled 13-under 133 in the 54-hole tournament.
Sorenstam finished with consecutive birdies, and eagled the long 12th ' her third hole.
I got off to a great start, Sorenstam said. I eagled my third hole and almost made a hole-in-one on my fifth. I played very, very well. I hit the last nine greens.
The 37-year-old Hall of Famer is counting on a strong finish Sunday.
Ive come from 10 behind, so I know everything is possible, Sorenstam said.
A winner of 10 majors and 72 LPGA titles, Sorenstam will retire at the end of the season to start a family and pursue business interests. She has won three LPGA titles this season.
The 20-year-old Reid finished with a birdie and two eagles.
Reid rolled in a 35-footer for eagle on the 17th. She chipped in from the front of the green on the 18th, another long par-5 hole.
I hit the ball much better today, said Reid, the LET rookie leader. I was just trying to keep it simple.