Inkster carded a 3-under 69 to join Dunn at 8-under-par 136. Cristie Kerr posted the low round of the day with her 6-under 66. That moved her into third place at minus-7.
First-round leader Paula Creamer struggled to a 2-over 74. That dropped her into fourth at 6-under-par 138. Stacy Prammanasudh (71), Karen Stupples (70) and Lorena Ochoa (73), who tops the LPGA Tour's money list, are one stroke further back at minus-5.
Scores were not as good on Friday as players played the ball down in round two. In the opening round, lift clean and place rules were in affect due to heavy rain earlier in the week.
Dunn birdied the par-five fourth for the second straight day to open her round. She also birdied No. 7 for second day in a row to move to minus-5.
The 35-year-old kept rolling with birdies on Nos. 8 and 9 at Magnolia Grove Crossings Course, which is part of the Robert Trent Jones Trail.
Dunn ran into trouble around the turn. She faltered to a double bogey on the par-4 10th to slide back to 5 under.
'I got a bad break,' Dunn said of her double bogey. 'I didn't really have a bad swing on the hole and got unlucky and there was something in my line on the two-footer, which is kind of crazy, but happens.
Dunn recovered those lost strokes with birdies on 12 and 13. She got to minus- 8 with a 3-foot birdie on 15 before closing with three pars.
'I putted really well. I was really happy with that,' Dunn stated. 'I didn't start off real well, but I made two good putts on the first couple of holes and then kind of got it going on four and made birdie.'
Inkster picked up a birdie on the first, but gave that stroke back as she bogeyed No. 5. The Hall-of-Famer atoned for that mistake with a 15-foot birdie putt on the sixth.
She made the turn at minus-7 after making a birdie on eight from 12 feet out. Inkster also fell back down the leaderboard early on the back nine. She dropped shots on 10 and 12 to fall to minus-5.
Inkster started to climb back up the leaderboard with an eight-foot birdie putt on 13. She closed with back-to-back birdies from the 16th to grab a share of the lead.
'I thought the course played a little tougher today,' admitted Inkster, who was the runner-up here in 1998. 'I didn't play as well as I played yesterday, but I putted very well and got a few irons in there when I needed them.'
Kerr mixed in an eagle, a bogey and five birdies over her 18 holes.
'I'm not really caring. It is only Friday,' Kerr said. 'I knew I was going to have to have a good round today so you are not playing catch up on the weekend. I just have to keep doing what I am doing.'
Angela Stanford posted a 1-under 71 and is alone in eighth place at 4-under-par 140. Wendy Doolan, Joo Mi Kim, Candie Kung and Sung Ah Yim share ninth place at minus-3.