Jane Crafter, Sophie Gustafson and Julie Piers share third place at 3-under-par.
Kerr did not look poised for a good round after a three-putt bogey at the first hole. That turned out to be her last mistake of the round as she quickly erased the bogey with a pair of birdies at Nos. 2 and 3.
She carded back-to-back birdies at the sixth and seventh, and capped off her front nine with 20-foot birdie putt at No. 9.
At the 12th, Kerr ran home a 15-footer for birdie and reached 6-under-par after a kick-in birdie at the 15th.
'I just played really well,' said Kerr, who is winless on the LPGA Tour. 'I hit 17 greens out there today, so I hit pretty much everything and I only missed three fairways, so it was smart golf. The only time that I was not close was the three-putt on the first hole.'
Sanders started on the back nine at Twelve Bridges Golf Club and like Kerr, she did not get off to a great start, thanks to a bogey at No. 11. Also like Kerr, Sanders rebounded with back-to-back birdies at the 12th and 13th, and Sanders closed her front nine with three birdies in a row to get to 4-under-par.
Sanders bogeyed the third hole after an errant drive, but once again fought right back with a birdie at four and another at No. 6.
She drained a 15-foot birdie putt at her last to draw even with Kerr.
'I love this golf course and this is probably one of the top two or three courses that I love playing all year long,' said Sanders, whose 66 on Thursday matched her lowest professional round. 'It is always a lot of fun playing up here and this was also the first tournament that I ever got into as a rookie, and so this is a special place for me.'
Heather Bowie, Helen Alfredsson and Karen Weiss share sixth place at 2-under-par.
Mi Hyun Kim and Carin Koch are tied for ninth at minus-one.
Defending champion Se Ri Pak is part of a group in a tie for 20th at 1-over-par.
Full field scores from the Longs Drugs Challenge