Dick Mast, a Monday qualifier, shot a 6-under 66 and is tied for second place with Brad Bryant, who carded a 5-under 67 on Saturday. The pair is knotted at minus-9.
David Edwards, playing in only his second Champions Tour event, fired a 7-under 65 and is alone in fourth place at 8-under-par 136.
McNulty, who shared the first-round lead with Tom McKnight, Keith Fergus and Scott Simpson, collected back-to-back birdies from the third hole, then made it two in a row from the seventh, including an 18-foot birdie putt at the eighth.
McNulty birdied the 10th hole to reach 10 under par, but hit a poor tee ball at the par-3 11th. He had close to 70 feet for his birdie and came up 15 feet short. McNulty missed that putt to drop his first stroke of the second round.
At the par-5 13th, McNulty hit a relatively poor drive and was forced to lay up short of the green. His third came to rest 3 feet from the hole and he converted the birdie putt. McNulty added another birdie at the par-4 15th, but the wheels came off down the stretch.
McNulty, who was ahead by two at 11 under par, found water at the 17th and walked off with a bogey. His lead was down to one and the 52-year-old found trouble at the closing hole. McNulty holed a clutch 10-footer to save par at 18 and that could be huge.
There are thunderstorms in the forecast for Sunday, so tee times were moved up. If the storms are too severe, there always looms the possibility that the event would be shortened to 36 holes.
That would give McNulty his sixth victory on the Champions Tour. But that's certainly not how he wants to collect the win.
'Everyone wants to play tomorrow,' acknowledged McNulty. 'I'm glad to be in the lead and here's hoping we finish 54 holes. It will be fun if we manage to get things done tomorrow.'
McNulty has converted two victories in five tries with the 36-hole lead. He has yet to finish better than a tie for 10th this season, but McNulty was still thinking about his finish on Saturday.
'I was more angry with myself,' said McNulty. 'I didn't quite play as nicely as I did yesterday. Had more birdies today. I am happy to make four at 18 and get out with the lead.'
Mast did his damage on the front nine Saturday. He sank a 12-footer for birdie at the first, then made two in a row from the fourth, including another 12-footer at five.
He two-putted from 25 feet for birdie at the seventh and rolled in a long birdie putt at No. 8. Mast recorded only one birdie on the back nine, at the par-5 13th, but he can still become the first Monday qualifier to win on the elder circuit since Pete Oakley at the 2004 Senior British Open.
'It could have been much lower on the back nine,' admitted Mast. 'I set my goal to win a tournament and was thinking about it today. If I can shoot 66 tomorrow, I'll have a chance.'
Bryant got within one in the opposite way of his fellow second-place finisher. He notched only two birdies on the front nine, then closed with a flurry. Bryant kicked in a short birdie putt at the 12th, two-putted for birdie at 13, then tapped in a 3-footer at the 16th.
'I'm hitting the ball really good,' said Bryant. 'Today I played the course exactly the way I wanted. I would have liked to have gotten the ball closer to the hole. I'm not making many, but I'm not three-putting either.'
Three-time winner this season Loren Roberts (67), Des Smyth (68), Simpson (70) and McKnight (70) are knotted in fifth place at 7-under-par 137.
Fergus (71), Hale Irwin (70), Jack Ferenz (67), Danny Edwards (67) and Bobby Wadkins (69) are tied for ninth place at minus-6.