Oliver Wilson was one of two players to set a new course record of 6-under 66 in the third round. He jumped to 7-under-par 209 and shares second place with fellow Englishman David Howell, who shot 69 on Saturday.
Stephen Dodd, who led after two rounds, managed an even-par round of 72. He was joined in a tie for fourth place at minus-5 by Jose-Filipe Lima and Andrew McLardy, who shared second place at the Madeira Island Open.
Dougherty, who earned his first tour win earlier this season at the Caltex Masters, moved to 5 under with a birdie on the third. However, he gave that stroke back with a bogey on the par-4 fifth at Carton House Golf Club.
The 22-year-old, who shared the lead after round one, atoned for that mistake with a birdie on the seventh. Dougherty then birdied the ninth to make the turn at 6 under. He parred his next three holes before converting a birdie try at the 13th.
Dougherty, who will turn 23 on Tuesday, moved into sole possession of the lead at minus-8 with a birdie on the par-5 15th. He birdied the last for a two-shot cushion after three rounds.
'I enjoy the feeling of playing with a lead,' said Dougherty. 'I like to see my name at the top of the leaderboard. It doesn't faze me and I don't start panicking. You play your own golf ball and you make the most of it. I think it helps that I know I can win in stiff competition. It gave me a lot of confidence winning in Singapore and that helped me today.'
Howell, who lost in a playoff at last week's Dunlop Masters to Thomas Bjorn, stumbled out of the gate with a bogey on the first. He steadied himself with five consecutive pars.
The 1999 Dubai Desert Classic winner ran off three straight birdies from the seventh to jump to minus-6. Howell holed a birdie attempt on the 11th to get to 7 under. He parred out to share second place.
Wilson got off to a quick start with birdies on one and four to get to 3 under. He faltered to a bogey on the fifth. After five pars in a row, Wilson eagled the par-4 11th to move to minus-4.
The Englishman tripped to a bogey at the next, but rebounded by making an eagle on the par-4 13th to jump to 5 under. Wilson dropped in consecutive birdies from the 14th. He fell back to 6 under with a bogey on 17, but birdied the last to end at minus-7.
'I was just kind of plodding along when I holed my 9-iron from 139 yards, then tapped in for an eagle two holes later,' Howell said. 'That got me going and I came home in 31 for a score I wouldn't have thought was possible when I played here in practice.'
Padraig Harrington, the top Irishman in the field, used a 4-under 68 Saturday to move into a tie for seventh at 3-under-par 213. He was joined there by Philip Golding, Jose Maria Olazabal, Angel Cabrera, Pelle Edberg and Titch Moore, who matched the 66 of Wilson.
Brett Rumford, the defending champion, is well off the pace at 5-over-par 221 after a 3-over 75 in the third round.