Des Smyth fired an 8-under 63 to move into a tie for third alongside Adam Scott at 10-under-par 132. The duo was joined by Maarten Lafeber, who was unable to complete his round after fog delayed the start of play at Club de Campo. Play will resume Saturday at 3:00 AM (ET).
Harrington, who is attempting to overtake Retief Goosen in the Order of Merit race, found his touch at a familiar venue. The Irishman earned his first European Tour victory at the 1996 Spanish Open on this course.
The 31-year-old played the back nine first and collected four birdies to make the turn at minus-10 and distance himself from the field. After back-to-back birdies starting at the third, Harrington owned a three-shot lead.
Harrington struggled on his way to the clubhouse, however, with bogeys at the fifth and the ninth. He salvaged what he could with a birdie at the seventh to finish at minus-11.
'The bogey at the last came because I fell asleep,' said Harrington. 'I was thinking about lunch or something. I thought my day's work was over and it wasn't.'
Harrington is currently third on the European Tour money list, trailing South Africans Ernie Els and Goosen by a slim margin.
'I was not looking at what Retief was doing,' said Harrington. 'It's hard enough to control what I am doing. But overall I'm happy and you are always going to hit some bad shots.'
Immelman, who also started on the back nine, began slowly with birdies on 14 and 18. After making the turn to the front side, Immelman caught fire carding birdies on four of his final six holes to join Harrington atop the leaderboard.
Fellow Irishman Smyth also started on the 10th, but did his damage on the front side. Smyth picked up seven birdies over his last nine holes to finish one shot back.
'It's very exciting,' said Smyth. 'I love just breaking 70 these days - I always think I've had a successful day if I do that.'
Miles Tunnicliff had eight birdies and no bogeys for a 63 of his own. Tunnicliff, who earned his first European Tour victory at the The Great North Open earlier this year, was joined by Sam Torrance, Marten Olander and Fredrik Jacobson at 9-under-par 133.
First-round leader Lee Westwood carded a 1-under 70 to finish three shots back alongside Andrew Coltart and Paul Lawrie at 8-under-par 134.
Defending champion Goosen posted a 3-under 69 to finish one shot further back at 7-under-par 135. The reigning Order of Merit champion was joined by Paul Casey and Anders Hansen.
Full-field scores from the Telefonica Open de Madrid