Dougherty finished 54 holes at 17-under-par 199, which matched Luke Donald's 2004 tournament record. He posted his 66 at St. Andrews, one of three courses in the rotation this week.
The Dunhill is played much like the Pebble Beach Pro-Am on the PGA TOUR with professionals and amateurs playing together for three rounds. Players rotate over the Old Course at St. Andrews Golf Club, Carnoustie Golf Club and Kingsbarns Golf Links for the first three rounds. Sunday's final round will be contested on the Old Course.
Dougherty was a second-round co-leader and his closest competition is one of his fellow overnight leaders. Australian Peter O'Malley shot a 3-under 69 at St. Andrews to get into second place at minus-14.
Reigning British Open champion Padraig Harrington shot a 5-under 67 at Kingsbarn on Saturday. He is tied for third place with Justin Rose (66), who can catch Harrington for the Order of Merit title, first-round leader Steve Webster (68) and 1999 British Open champion Paul Lawrie (64).
That group finished at 13-under-par 203 and everyone in that logjam played at Kingsbarn on Saturday with the exception of Lawrie, who teed it up at Carnoustie.
With so many big names lurking, Dougherty will have to play well to hang on for his first win since the 2005 Caltex Masters in Singapore.
'To shoot 66 like that, an easy 66, gives me a lot of confidence for the final round,' said Dougherty.
Dougherty collected his first birdie of the round at the fourth on Saturday. He ran home a 12-footer for birdie at the next hole to reach 13 under par for the championship.
At the par-4 seventh hole, Dougherty tallied his third birdie of the round. He once again rattled off back-to-back birdies as his 12-footer at the eight fell into the cup.
Dougherty's next birdie came at the par-3 11th. He knocked his tee ball over the flag, then watched it spin inside 2 feet. Dougherty holed that birdie putt to pad his lead at 16 under par.
Dougherty's final birdie came at one of golf's most famous holes, the 'Road Hole' at St. Andrews. The Englishman found the intermediate cut off the tee at 17, but managed to get his approach to 25 feet. He sank the birdie putt to take a three-shot lead.
'It's about time the old lady (St Andrews) was kind to me,' joked Dougherty. 'I've always walked away from here feeling I'd left my good scores on the course.'
This will be the fourth time on the European Tour that Dougherty will have at least a share of the 54-hole lead. His only win in Singapore was the first time it occurred and he lost two other third-round leads later that same year.
O'Malley had a wild round to get to second place. He started on the back nine at St. Andrews and recorded three birdies and a double-bogey over his first 18 holes.
He birdied the first then sank a 6-foot birdie putt at the third. He reached 14 under par with that birdie, but dropped a shot thanks to a bogey at No. 6.
The Australian needed to convert a 12-foot birdie putt at his last hole to get into sole possession of second place. He did just that and will play with Dougherty in the final group Sunday.
Ernie Els shot a 2-under 70 at Kingsbarn and is tied for seventh place with Niclas Fasth, who fired a 67 at the same location. The pair is knotted at minus-12.