Garrido finished 36 holes at 15-under 129 and is four clear at the Real Club de Golf de Sevilla.
'It's a dream to play so well in front of my home fans at my national Open,' said Garrido. 'Other than the majors, this is the one tournament all Spaniards want to win.'
Overnight leader Martin Erlandsson shot a 4-under 68 and is alone in second at minus-11.
Marco Ruiz (66), Carlos Rodiles (68), David Lynn (66) and Peter Fowler (66) are knotted in third place at 8-under-par 136.
They will have their work cut out for them to catch the leader.
Garrido began on the 10th tee Friday and broke into red figures early with a birdie on that hole. He rattled off three birdies in a row from the 12th and added his second birdie in as many rounds at the par-5 16th.
The Spaniard made the turn at 5-under 31 after pars at 17 and 18. Garrido parred the first, then posted back-to-back birdies from the second to reach 13-under par for the championship.
At the par-four sixth, Garrido badly missed the fairway on the right. He took an aggressive line toward the flag and pulled the shot off, stopping it less than a foot from the hole. He tapped in for the birdie, but had one more birdie left on the card.
Garrido's final hole was the par-5 ninth and he took advantage. His third came to rest within tap-in range and the Spaniard kicked it in to post an impressive number.
'That was probably the best golf of my life. I had lots of fun out there,' said Garrido. 'We play a very tough sport, so it's important to enjoy the good days. It can go fantastically well one day then not so great the next, so I'm not getting carried away.'
Garrido has two European Tour titles, but none since the Volvo PGA Championship in 2003. He's made only two cuts in the 2008 campaign and has not held the 36-hole lead on tour since the KLM Open two years ago. Garrido shot a 73-74 on the weekend at that event and tied for 42nd so he's not taking anything for granted.
'I've given myself a great chance, but there's still a long way to go,' acknowledged Garrido. 'I'm just going to keep plugging away, and keep faith in my abilities. I've felt really comfortable on the range this week, and fortunately I've been able to take that form into the tournament.'
Erlandsson bogeyed the first, but went 4 under through three holes from the third thanks to two birdies and an eagle. He tallied two birdies and a bogey the rest of the way.
'Obviously Ignacio's round put the pressure on me, but I also saw it as a good opportunity to post a low score here,' said Erlandsson. 'I was probably a bit tense on the first few holes, but I decided to go back to basics and relax more, and it did the trick.'
Miguel Angel Jimenez (67), Mark Foster (67), Jose Manuel Lara (66), Andrew McLardy (65), Henrik Nystrom (69) and Anthony Wall (66) share seventh at minus-7.
Last week's winner, Darren Clarke, shot a three-under 69 and is part of a group tied for 36th at minus-3.
Colin Montgomerie posted a one-over 73 and made the cut on the number at 1- under-par 143.
Defending champion Charl Schwartzel (144), Gonzalo Fernandez-Castano (144) and John Daly (145) will all have the weekend off after missing the 36-hole mark.