Lorena Ochoa, the 2003 runner-up, posted a 5-under-par 67 to claim second place. Maria Hjorth, who shared second place in 2001, is one stroke further back at minus-4.
Hilary Lunke, the 2003 U.S. Women's Open champion, carded a 3-under-par 69 and stands alone in fourth place. Laura Diaz, Christina Kim, Se Ri Pak and 2003 Wegmans champion Rachel Hetherington share fifth place at minus-2.
Morgan began her round on the back nine at Locust Hill Country Club and got off to a hot start. She rolled in a birdie try at the par-4 10th and then made it two straight with a birdie at the par-5 11th.
The 30-year-old dropped in three in a row when her 4-foot birdie try at the 12th fell into the cup. Morgan tripped to a bogey at the 14th, but rebounded with a birdie on the par-5 17th from 8 feet out.
Morgan then caught fire on the front nine. She moved to 4 under with a birdie on the third. The Wales native came right back with a birdie on four and made it three straight with a 3-foot birdie putt at No. 5.
Morgan, who has never won on the LPGA Tour, ran home a 40-foot birdie putt at six. She made it five in a row with a birdie at seven. She parred the final two holes to close three shots clear of the field.
'I suppose it could remind you of the course at home,' said Morgan. 'I just prefer the courses like this. I suppose they're shorter, it played quite long today, but having to think your way around a golf course instead of slugging it off tees and stuff is probably more my game.'
Ochoa opened with a birdie on the second, then rolled in a 10-foot birdie putt on four. The Mexican faltered to a bogey on the sixth, but ran off three straight birdies from the seventh to move to 4 under.
The 23-year-old parred her next five holes before sinking a 15-foot birdie try at the 15th. Ochoa closed with three pars in a row to take second place.
'I'm extremely happy. I finished fairly well,' said Ochoa, who finished four shots behind Hetherington in 2003. 'Today, it was a different day for me. The front nine I played a little bit up and down. I missed pretty much every fairway. And then on my back nine, I was just more relaxed. I started hitting my driver better, hitting more fairways and that was the difference.'
Paula Creamer, who won the Sybase Classic four weeks ago in New Rochelle, posted a 1-under-par 71. She was joined in a tie for ninth by 2001 champion Laura Davies, Dorothy Delasin, Natalie Gulbis, Beth Allen, 1991 and 1998 winner Rosie Jones, Emilee Klein, Gloria Park, Stephanie Louden and Angie Rizzo.
Kim Saiki, the defending champion, opened with a 1-over-par 73. She stands in a tie for 28th.