Leonard, the defending champion, stands at 13-under-par 129, three shots clear of Carl Paulson (66) and overnight leader Marco Dawson (68).
Dawson birdied his first two holes, but a double bogey at the par-3 3rd (his 12th hole of the day) dropped him five shots off the lead. The 37-year-old recovered, birdieing two of his final three holes to earn spot in Saturday's final pairing.
Dawson is playing this year on a medical extension after missing most of 2000 due to back surgery. Hes currently 173rd on the money list.
Leonards second round was bumpy to start, as he carded two bogeys and two birdies over his first six holes.
He then, however, made his charge up the leaderboard.
The Dallas native, who started on the back nine, birdied Nos. 16 and 18 to move to 8-under as he made the turn. Leonard offset a birdie at the 1st with a bogey at the 2nd, but birdied five of his final seven holes to vault to the top.
Leonard won this tournament last year to break a winless drought that dated back to the 1998 Players Championship. He has also finished twice at La Cantera in 1995 and 98.
The former Texas Longhorn has yet to win in 2001, but has performed quite well in his home state - finishing tied fourth in the Shell Houston Open, tied sixth at the Verizon Byron Nelson Classic in Dallas and tied fifth at the MasterCard Colonial in Ft. Worth.
Ive never played as well in the state of Texas as I have this year, said Leonard.
The 29-year-old would like to continue his fine play in the Lone Star State in November. The season-ending Tour Championship is at the Champions Golf Club in Houston. The top 30 players on the money list prior to the $5 million event qualify. Leonard is currently 39th in earnings.
Friday was supposed to mark the beginning of play in the 34th Ryder Cup in Sutton, England, but the event was postponed until next September due to the terrorist attacks in the United States two and a half weeks ago.
U.S. team members Hal Sutton and David Toms are in the field, as is European Jesper Parnevik.
Parnevik shot a second-round 66 to move to 9-under for the tournament, just four off the lead. Sutton is 4-under through two rounds thanks to back-to-back 69s. However, Toms will not be around for the weekend following rounds of 74-73.
Full-field scores from the Texas Open