The 34-year-old Louisianan aced the 243-yard, par-3 15th en route to shooting a 5-under-par 65. He stands at 14-under-par through 54 holes at the Atlanta Athletic Club in Duluth, Ga., two shots clear of Phil Mickelson, who shot 66.
Toms Saturday playing companion Shingo Katayama shot a luck-filled 69 and is tied for third place with Steve Lowery (66) at 10-under. David Duval (67) is alone in fifth place at 9-under.
Toms has already trumped Mickelson once this year, coming from behind to defeat the worlds No. 2 ranked player in the Compaq Classic.
'I think I'm capable of winning,' said Toms, who has five career PGA Tour wins. 'I showed that today, because I hung in there early when I didn't have my game, and a I finished up strong.'
Toms is also vying for an automatic spot on the U.S. Ryder Cup team. He currently resides in 14th place, with this event being the last for players to earn Ryder Cup points.
Click here to see how potential Ryder Cuppers fared in rd. 3
One player Toms and Mickelson wont have to worry about on Sunday is Tiger Woods. The two-time defending champion could only muster a 1-under 69 in the third round, and stands 13 shots off the lead.
Woods, who needed two lengthy birdie putts to make the cut, was unable to produce the expected dramatics. Despite holing a sand wedge from 110 yards for an eagle on the par-4 9th, Tiger ended his round with a pair of bogeys to finish 54 holes at 1-under-par.
I felt like I was actually swinging better, said Woods. I figured if I could get 3- or 4-under on the back nine, I would be back in the tournament. I was not able to do that.
Tigers eagle was just one of a series of spectacular shots produced on Saturday.
Nick Faldo aced the par-3 4th. Mickelson constantly peppered the flagsticks. And, of course, Toms provided the shot of the day at the 15th.
Katayama was easily the most fortunate of the competitors in the third round. Wearing his trademark cowboy hat, Katayama stayed in contention when his tee shot on the par-3 17th caromed of the bricks surrounding the green and managed to stay out of the water.
He went on to make par.
Katayama then used another of his nine lives when he challenged the 490-yard, par-4 18th. Following a short tee shot, Katayama pulled a 3-wood and chose to attack the green. His ball landed in the water, but skipped over the miniature brick wall encompassing the green and landed in the fringe.
Once again, he saved par.
It appeared mid-Saturday that Mickelson might run away from the field. Despite double bogeying the par-4 3rd, the left-hander recorded four birdies on the front nine to make the turn in 2-under 33.
On the backside, Mickelson nearly holed his approach shots on both the 11th and 14th holes. He also added a birdie at the par-5 12th to take a two-shot lead at 13-under.
However, the tide turned at the par-3 15th.
Mickelson missed the green on the 243-yard hole and made a bogey. Then, playing in the group behind him, Toms struck a 5-wood that hit the green, hit the flagstick, and hit the bottom of the hole.
'It was the perfect yardage, the perfect club,' Toms said. 'It's the coolest shot I've ever hit.'
The three-shot swing gave Toms a one-shot lead with three holes remaining.
That advantage stayed intact as the final twosome approached the final hole. Toms hit a beautiful second shot to the longest par-4 on the course that rolled into the first cut of fringe on the back of the green.
Hoping to successfully two-putt to keep the lead entering the final round, Toms gently rolled his ball down the slope and into the cup for an unexpected birdie.
Apart from Woods back-to-back victories the past two years, ten of the 11 champions from 1988 to 1998 made this tournament their first major victory.
Toms would like to join that list, which includes names like Jeff Sluman, Wayne Grady, John Daly and Mark Brooks.
Mickelson would also like to join that list, which also includes Payne Stewart, Nick Price, Davis Love III and Vijay Singh.
News, Notes and Numbers
*This is the seventh time that Mickelson has entered the final round of a major championship within two shots of the lead. In 30 prior final rounds in a major hes only broken 70 twice.
*Toms' 14-under 196 is an aggregate 54-hole PGA Championship scoring record. Ernie Els holds the record in relation to par at 16-under 197 in 1995.
*Rick Schuller, the lone club professional to make the cut, made a 70-foot birdie putt on No. 18 to finish the third round at even par.
*Faldo's hole-in-one came courtesy of a 4-iron on the 204-yard 4th hole. It's his first ace in a major championship.
Full-field scores from the 83rd PGA Championship