Knost, who picked up his first Nationwide Tour victory this season after winning both the U.S. Amateur Public Links and U.S. Amateur last year, was at 13-under 131 overall.
Brent Delahoussaye fired a 63 and shared second place with Darron Stiles and Bradley Iles, who both posted rounds of 65. They were two shots off the lead at 11-under 133.
Six players were knotted in fifth place at 10-under 134, and there were 19 overall who were within five shots of Knost's lead.
Knost lost his exemption to this week's British Open -- as well as the Masters and U.S. Open -- when he turned pro following his amateur wins last summer.
But he's making the best of that decision, having already won the Fort Smith Classic -- and now leading this event heading to the weekend.
Ranked 20th on the money list entering this week, Knost is in good position for a top-25 finish at the end of the season, which would garner the talented 23-year-old rookie a PGA TOUR card for next year.
Not that he's worried about that quite yet.
'I'm focused on this,' said Knost. 'This is a major to me this week. Every tournament is.'
Knost has played well enough to back that statement up.
He posted five birdies in a flawless second round on Friday after collecting nine birdies and a bogey for a 64 in a near perfect first round on Thursday.
'I've been hitting a lot of good iron shots,' said Knost. 'I'm hitting a lot of shots close and making the putts you're supposed to make. It seems like I've been having really good numbers and hitting full shots in there.'
Now all he has to do is hang on for a win that could carry him to No. 3 on the money list.
'I know that one good week puts me on the PGA TOUR next year,' said Knost. 'I don't really have to make that much money to get it done, but it's out there and you still have to do it. That's the hardest part.'
Knost realized he was only halfway to the finish line.
'I'm glad to have a chance going into the weekend,' he said.
The cut line fell at 5-under 139 following two days of good scoring at Highland Springs Country Club. Sixty-seven players moved on to the weekend.