Atwal birdied his last two holes and broke the tournament's 54-hole scoring record by two shots at 24-under-par 192.
Webb Simpson, who tied the Nationwide Tour's 36-hole scoring record to hold overnight lead, was tied with Atwal standing on the 17th tee Saturday following back-to-back birdies. But a bogey-par finish -- coupled with Atwal's birdies -- left him to play catch-up.
Simpson ended with a 2-under 70 for the round and was alone in second place at 21-under 195.
Bill Lunde shot a 68 and was in third place at 19-under 197, while Hunter Haas had a 67 to sit another shot further back at 18-under 198.
Only eight more players were within 10 shots of Atwal heading into the final round at Black Creek Club.
Atwal, a three-time winner on the European Tour who broke the single-round tournament scoring record with a 60 on Friday, will be seeking his first Nationwide Tour victory on Sunday.
It was a sudden turn of events that left Simpson chasing him.
The duo was tied at 22 under par after Simpson made birdies at the 15th and 16th holes. But Simpson put his tee shot into a bunker at the par-3 17th and made bogey, while Atwal walked off with a birdie and a two-shot lead.
'Seventeen was a tough hole today,' said Atwal. 'Webb tried to hold his shot up in the wind. It caught the trap left. It's dead in there and he didn't get it up and down. I hit mine to 10 feet and made it and that was the turning point.'
Atwal got up and down from a greenside bunker to make birdie at the par-5 18th, gaining yet another stroke when Simpson managed only a par there.
Overall, Atwal collected seven birdies and just one bogey in his third round, while Simpson finished an up-and-down effort with an eagle, five birdies and five bogeys.
Simpson, a 23-year-old from North Carolina, will be seeking his first Nationwide Tour victory on Sunday.
'I made a few nice 20-footers, but I missed a ton of putts inside 10 feet,' Simpson stated. 'It was disappointing because I scored about as bad as I could for the way I was hitting it. This is one of those courses where you can go out and shoot 7, 8 or 9 under again if it's not windy. That's what I'll try to do.'
Atwal, 30, claimed his third European Tour win earlier this season at the Maybank Malaysian Open. He broke Boo Weekley's 54-hole tournament scoring record from 2006 (194).