First-round leader Pat Hurst is tied for fourth with Marisa Baena at minus-seven.
Kerr carded a tap-in birdie at the par-5 3rd after her eagle attempt lipped out of the hole but she dropped a shot at the next when she sailed a sand wedge 20 yards over the green.
The 23-year-old holed a five-foot birdie putt at the sixth but once again followed a birdie with a bogey as she chipped over the green at No. 7 and two-putted.
She holed another five-foot birdie at the eighth to go out at 1-under 35.
Kerr chipped in for birdie at No. 10 after she missed the green short because of an errant tee shot. She added another birdie three holes later with a six-foot putt but dropped a shot at the next hole when she hit over the green and failed to get up and down. In fact, Kerr made a seven-footer to save bogey.
Kerr birdied three of her last four, including a pair of 10-footers at Nos. 16 and 18 to put herself in good position for her first LPGA Tour victory.
Check out Cristie Kerr's scorecard!
'I did not hit very many fairways or greens, but I hit every putt I looked at,' said Kerr, whose first professional tournament was here in 1996. 'I had a good temperament out there and was able to execute the things I could control.'
Kane, a four-time winner on the LPGA Tour, posted a 3-under 68 on Saturday that was started with a three-foot birdie at No. 3. She picked up back-to-back birdies at Nos. 5 and 6 thanks to solid wedge play, knocking her shots to 12 feet and six feet, respectively.
The Canadian ran into trouble after she made the turn. Kane bogeyed the 12th after she missed the green short and two-putted and at No. 14, Kane nailed an 8-iron over the green and missed a 10-foot par save for her second bogey in three holes.
Kane rebounded on her way in with an eight-foot birdie at No. 15 and four-footer at the 17th. She had only 20 yards to the hole for her third shot at the par-5 18th but failed to make birdie and take the lead.
'I am here to win, I am looking forward to sleeping tonight and playing aggressive tomorrow,' said Kane, who has seven top-10 finishes in 14 starts this season. 'I'll keep ahead and get out of the gate.'
King mixed four birdies and two bogeys on Saturday for a 2-under 69.
Hurst never recovered from three straight bogeys on the front nine and finished with a 1-over 72. She hit her tee shot into the left rough at the sixth and because of trees in her line, had to pitch out into the fairway.
Rosie Jones (66), Michelle Estill (69) and Carin Koch (70) share sixth place at 6-under par.
Defending champion Janice Moodie carded a 4-under 67 Saturday and jumped into a tie for ninth at minus-five.
The 36-hole cut fell at 1-over 143 with 76 players qualifying for the weekend.
Full-field scores from the ShopRite LPGA Classic