Karlsson was at 15-under-par 129 overall, his 61 on Friday breaking the previous Castello di Tolcinasco course record of 62 set by fellow Swede Joakim Backstrom last year.
Ranked No. 48, Karlsson is one of only five golfers in the world top 50 not competing at THE PLAYERS Championship this week.
'My caddie actually got a text from Nick O'Hern's caddie, who is at Sawgrass, and it said 'greens rock hard, fairways rock hard, rough very thick, greens running 13, and forecast high winds' so I said to him 'Maybe it is good that I am here!' Karlsson remarked.
Next week's European Tour event is the Irish Open, meaning Karlsson would have had considerably more travel time had he competed in THE PLAYERS Championship this week.
'It worked out best for the family, too, because I can see the kids on Monday. So there are many plusses to coming here, [including] the lure of good Ryder Cup points if I could go on and win,' said Karlsson.
He had a two-stroke cushion on England's Mark Foster and South Africa's Hennie Otto, who both shot 66 on Friday to share second place at 13-under 131.
Denmark's Anders Hansen (65) and Argentina's Estanislao Goya (67) were tied at 11-under 133, with seven players knotted another shot further back at 134.
Karlsson, who opened with a 68 in the first round to share 24th place overnight, vaulted into the lead with eight birdies, two eagles and just one bogey on Friday.
He started on the back nine with three consecutive birdies, followed by a bogey at the 13th and an eagle at the par-five 15th on the way to a 32. He then scorched the front nine for a 29, making five birdies and another eagle at the par-5 first.
Karlsson also shot a 61 in the first round of the 2006 Wales Open, though it came on a par-69 course. He won that tournament for one of his seven European Tour titles.
His 129 total after Friday's round was one shot off Ian Poulter's 36-hole tournament record from 2002.
Karlsson spoke of a recent drop in the world rankings, and his decision to play in Europe this week.
'All of a sudden you don't know, and it only takes a couple of guys to win and you can go either way,' he said. 'So I decided to stay in Europe and prepare for here, which was good.'
The cut line fell at 4-under 140, with the previous two champions, Gonzalo Fernandez-Castano and Francesco Molinari, missing the mark.
John Daly made it to the weekend finishing at 4 under after a 1-over 73 on Friday.