Sterne completed 54 holes at 13-under-par 203. He is one clear of second-round leader Oliver Wilson, who stands at minus-12 after a third-round 70.
South African Anton Haig carded a 2-under 70 Saturday and is alone in third at 11-under-par 205, while Richard Lee is two strokes further back after a 70 of his own.
Retief Goosen, the 2002 champion, moved into a share of the lead after three straight birdies from the second, but followed that with three consecutive bogeys. The South African went on to shoot even-par 72 after a closing bogey. He dropped from a share of third to fifth at 8-under-par 208.
Sterne, who along with Haig matched Greg Norman's course record of 64 on Friday, opened round three tied for 11th. Sterne started with three pars before posting his first birdie at the fourth.
The 25 year old made it two straight as he birdied the par-4 fifth. Sterne birdied the par-5 sixth to make it three in a row and get to minus-8.
Sterne birdied the ninth at Blue Canyon Country Club for the second day in a row. He got to 10 under with a birdie on 12. Sterne moved within one of the lead as he birdied 15 and 16, each for the third day in a row.
For the second time on the day, Sterne made it three straight birdies as he birdied the par-3 17th to move to minus-13. That gave him a share of the lead. Sterne parred the last to close his second straight bogey-free round.
'This year my goal is to get into the top 50 in the world and hopefully get to the United States,' said Sterne of his goals for this year. 'I've never played there professionally. I need to learn how to win, especially in tough fields.'
Sterne admitted afterwards that he had checked out of his hotel on Friday before his first 64 helped him make the cut.
'I checked out of my hotel and took my bags to the course,' Sterne admitted. 'I had a flight home at 8:00 p.m. that I fully expected to be on. Luckily I played well to shoot 64 and was able to check back into the same hotel.'
Early on, Wilson and Haig shared the lead at minus-10 after Haig birdied the first. However, Haig bogeyed the second to fall from the lead.
Wilson birdied the third, but was joined in the lead by Goosen, who had run off three straight birdies from the second. Goosen fell off the pace as he bogeyed the following three holes.
The 26-year-old Wilson birdied five and six to move three clear of Haig at 13 under. From there, Wilson parred his next 10 holes. Sterne, playing eight groups ahead of the leader, caught Wilson during his par run.
Wilson stumbled to a bogey on 17 to slip back to minus-12 and a par at the last meant he finished the round one shot behind Sterne.
'It was a shame about the 17th, but I just can't see the shot in there,' said Wilson, whose tee ball at the par 3 came up short, right of the green. 'I tried to cut in a four iron, but it came out a bit thin. I did lose a bit of concentration, but managed to regroup and had a solid par at the last.'
Wen-Chong Liang and Aron Price each posted rounds of 5-under 67 to move from a share of 32nd into a tie for sixth at 7-under-par 209. They were joined there by eight-time Order of Merit winner Colin Montgomerie (70), Graeme Storm (70) and Ter-Chang Wang (71).
Ernie Els and Phillip Archer each shot 67 to jump from a share of 51st into a share of 11th at minus-6. Also vaulting to minus-6 was Simon Hurd, who fired a 66 to climb 50 places in the standings. Those three were joined at 6-under-par 210 by Richard Bland, Stephen Gallacher, James Nitties and Jeev Milkha Singh.