Defending champion Beth Daniel shot a 68 to join Aree Song, Gloria Park and Dawn Coe-Jones in a tie for third place at 7-under-par 137.
Mallon carried her momentum from last week's victory at the U.S. Women's Open north of the border with a 65 in the opening round on the Battlefield Course at Legends on the Niagara to take a two-shot lead. While Mallon's second round didn't produce the same amount of scoring, it was enough to keep her atop the leaderboard heading into the weekend.
'I started out poorly, not swinging well and not having control of my game,' said Mallon, who won this event in 2002. 'I was just happy that I could develop some sort of rhythm out there with a round that absolutely had no momentum whatsoever.'
Mallon started on the 10th and quickly found herself moving backwards with back-to-back bogeys starting at the 12th, her first dropped shots since the third round of last week's U.S. Women's Open.
'It was kind of cool, it was a long streak of not making a bogey, and just to add to it I bogeyed the next hole, just to feel better about it,' she said. 'After that I started getting control of my game.'
The 41-year-old began her recovery with a birdie at the par-3 17th and worked herself back into the lead on the front side.
Mallon picked up a birdie at the third and added birdies at the fifth and the eighth to stay on top.
'I'd like to bring the game that I had the last eight or nine holes into the weekend, because I feel like I'll play really well if I do that,' said Mallon. 'We'll see what happens. It's going to be a fun weekend.'
Ochoa collected four birdies and a bogey on the front nine to make the turn at 6 under. She birdied the par-5 11th and hit a 6-iron to 4 feet for a birdie at the 12th.
After a bogey at the 17th, Ochoa played her third shot to 9 feet and ran home the birdie putt to finish alone in second.
'It's good to be one stroke behind,' said Ochoa, who posted a 67. 'I don't want to put too much pressure on myself. Being in the lead is hard. It's nice to come from behind. I'm happy to be in the position I am in today.'
Song birdied each of her last three holes to complete a round of 66 and finish two shots off the pace with a share of third.
'I played pretty solid all the way around,' said Song. 'I hung in there and had some good swings and took advantage of it with the putts, so I'm pretty pleased.'
Nancy Scranton finished alone in seventh place at 6-under-par 138. Mi Hyun Kim, Kris Tschetter, Johanna Head, Heather Bowie and Wendy Ward shared eighth place at 5-under-par 139.
The 36-hole cut fell at 2-over-par 146 with 81 players qualifying for the weekend.