Danny Briggs, who shot a 66 to finish at 12-under, and Jason Caron (68) are both a shot back.
Andy Sanders (69) and second-round co-leader Patrick Sheehan (71) are tied for fourth, two shots back. Dave Stockton Jr. shot the day's best round, a 7-under 65, to get to 10-under and share sixth place with Steve Holmes (67), Richard Coughlan (67) and Jace Bugg (72).
'I didn't strike it as good at the start of the day,' said Baddeley, a two-time winner of the Australian Open. 'I've been swinging good and putting good. The whole thing was to stay patient.'
Baddeley started slowly, but birdied four of his final seven to emerge from the pack and grab the lead.
'I remember both Australian Opens I just tried to stay patient during the final round,' said the 21-year-old. 'I just kept playing the way I was playing. The same thing here. It's gotten me this far, there's no reason to change.'
Briggs is vying for his first title on either the Buy.Com or PGA Tours.
'I've been there a bunch of times on this tour but was never able to close it out,' Briggs said. 'The reason I'm here is to win, not to make the cut.'
Full-field scores from the Buy.Com Arkansas Classic