Stanford birdied her final hole Saturday en route to a 2-under 69.
Annika Sorenstam, battling a sore throat, shot the only bogey-free round of the championship with a 4-under 67 on Saturday.
Sorenstam drained a three-foot birdie putt at the fourth and made it two in a row with a putt from the same length at five. At the eighth, Sorenstam knocked an 8-iron to 15 feet to set up birdie and tapped in a short birdie putt at 14.
Perhaps the biggest shot of the third round for Sorenstam came at 17 when she faced a long birdie putt. Her 50-footer from right to left ran six feet past the cup when it took the break. She stroked home the par save to stay near the top of the leaderboard as she finished a good hour before the leaders.
With the relative inexperience of the players ahead of her, Sorenstam likes her chances of adding her second major trophy of 2003 after winning the LPGA Championship last month.
'I know how to react under these conditions,' said Sorenstam, a two-time former champion. 'I'm happy where I'm at. I would like to be in my shoes tomorrow, and play my golf.'
She shares third place with amateur Aree Song (68), Jeong Jang (69) and overnight leader Mhairi McKay, who struggled to a 4-over 75 in the third round. The group stands at 2-under-par 211.
Michelle Wie, the 13-year-old phenom whose father B.J. caused stir on Friday by alleging that Danielle Ammaccapane pushed the younger Wie on the green Thursday, shot a 5-over 76 to finish in a tie for 39th at 9-over-par 222.
The big story to come out of the Wie camp was that B.J. retracted those allegations Saturday.
'I think it was incorrectly represented to reporters that sounds like bumping. It's not like football bumping or tackling,' said B.J. Wie, who also caddies for his daughter. 'There was no physical contact. At all.'
Lunke began the third round four shots behind playing partner McKay. Lunke birdied the first hole then drained a long birdie putt at the third. McKay bogeyed No. 2 and dropped her tee ball into the water at the fifth and suddenly McKay, Lunke and defending champion Juli Inkster were tied for the lead at 4-under par.
McKay and Lunke both bogeyed the sixth to leave Inkster alone in first but the two-time former champion fell off the pace with a bogey at seven. Lunke drained a 15-foot birdie putt at seven in the group behind to take the lead of the championship at 4-under.
Inkster and Stanford birdied eight to match Lunke in first but Lunke sank a five-foot birdie a short time later to go to 5-under. Lunke birdied the ninth to go out at 32 and reach 6-under par, which was good for a two-shot lead over Stanford.
Lunke parred the first three holes on the back side but Stanford closed the gap with a five-foot birdie putt at the 12th. McKay birdied 11 but fell way down the leaderboard with three bogeys in her next four holes.
Lunke missed a six-foot par save at the 13th to fall into a tie for the lead with Stanford. Stanford dropped a shot at the 14th when she drove into the primary cut of rough, but Lunke also bogeyed 14 from the greenside bunker and two were once again knotted at 4-under par.
At the par-3 15th, Lunke went through the green and chipped to 10 feet. She ran home the tough par save to keep pace with Stanford, who was having trouble one hole ahead. At No. 16, she shanked her second shot and bogeyed the hole to once again drop one stroke behind the lead.
Lunke got a great kick with her approach at the 16th. Her ball bounced off the fringe and stopped five feet from the hole. She converted the birdie putt to complete a two-shot swing on 16 and go to the closing holes up two.
'I felt like I hit a great shot into 15 so I was kind of mad,' said Lunke. 'I got a very friendly bounce at 16. That's definitely the key to my round.'
Stanford had a great look at birdie at 17 with an eight-footer but the putt never touched the hole. She hit a spectacular approach at 18 and kicked in the two-footer for birdie to get within one of Lunke, who played conservatively on the final two holes and made par.
For Lunke, this is the best chance at not only major victory No. 1, but her first title on the LPGA Tour. Her best finish so far this season is back-to- back ties for 21st in her last two starts and last year, she tied for 15th at the Wendy's Championship for Children.
Lunke took the 54-hole lead for the first time in her career on the LPGA Tour and that bodes well for the 24-year-old. Since the tournament was contested at Pumpkin Ridge in 1997, the 54-hole leader has gone on to win the tournament every year but 2002 when Inkster overtook Sorenstam.
'It's pretty much a surreal feeling,' said Lunke, who can become the first player to make their first win on tour a major since Se Ri Pak won the LPGA Championship in 1998. 'It is a blast at this point right now.'
Stanford is relatively untested as well. She never made the cut at the U.S. Women's Open before Friday but is certainly playing well heading into Pumpkin Ridge. Stanford earned her first LPGA Tour title last week at the ShopRite LPGA Classic and hopes to use that momentum on Sunday.
'I think it would be different if I didn't win last week,' said Stanford. 'A golf tournament is a golf tournament but it is the U.S. Open. Playing in the final group and having a chance to win is a big deal. I'm going to feel more comfortable since I did what I did last week.'
Donna Andrews shot a 1-over 72 to finish alone in seventh at even-par 213. Inkster finished with a 3-over 74 and is tied for eighth place with Kelly Robbins (71), Natalie Gulbis (72) and Suzann Pettersen (69).