The 41-year-old Scot stands atop the leaderboard at 15-under-par 201, matching the 54-hole record for this event established by Seve Ballesteros 10 years ago.
'Im very, very pleased with the way I went about things today,' said Oldcorn, who closed with two birdies to better the previous best third-round lead at Wentworth Club by two shots.
'I made a couple of mental mistakes which is going to happen, but all in all I was really pleased with the way I played.'
Sweden's Niclas Fasth birdied the par-5 home hole for a 69 and second place at 10-under 206 with Welshman Phillip Price and first-round leader Angel Cabrera of Argentina. Price and Cabrera shot even-par 72s.
New Zealand's Michael Campbell, the leader on the Order of Merit after finishing second to Tiger Woods last week in Germany, vaulted into contention with the day's co-low round of 67. He is six shots off the pace with 1994 Volvo PGA champ Jose Maria Olazabal, who had the other 67, and Steve Webster, who turned in a 72 on Sunday.
Nick Faldo, a four-time Volvo PGA winner in the 1980s, rounded out the top-10 with Vijay Singh, Andrew Coltart and Stephen Leaney.
Two shots ahead at the start of the day, Oldcorn lost a stroke to the field with a bogey at the third. He bounced back in a big way at the next hole, sinking a 15-foot eagle putt to go back up by two.
Oldcorn's lead was five after Cabrera bogeyed the fifth and Oldcorn followed a 18-foot birdie putt at the sixth with a chip-in birdie at No. 7.
But Oldcorn stumbled badly at the par-3 10th, where his tee shot bounced short of the green and rolled down a bank. He played a low pitch that landed short of the green, then watched as his high chip rolled eight feet past the hole. He missed the putt to save bogey, notching his second double-bogey of the week.
Although Oldcorn recovered one of the lost strokes with a beautiful approach that stopped a foot short of the cup at 13, he bogeyed the 15th to slip back to 13-under-par.
Oldcorn capped his round by taking advantage of Wentworth's two closing par-5s. He tapped in for birdie after barely missing his 25-foot eagle bid at the 17th, then missed a six-foot eagle attempt and settled for birdie at the last.
Oldcorn, a two-time winner whose last title came six years ago at the DHL Jersey Open, is hoping to finally put the memory of the 1996 Irish Open behind him. He was gunning for his third career victory that year at Druids Glen, but double-bogeyed the final hole to hand the trophy to Colin Montgomerie.
'The only thing I mustnt do is think of what winning would mean to me,' said Oldcorn, looking become the first player over the age of 40 to win this event at Wentworth Club.
'I did that very well today. I know its going to be more difficult for me tomorrow but Im reasonably confident that if I can maintain the same equilibrium that I had today, I will have a chance.'
Darren Clarke, Thomas Bjorn and 1999 British Open champ Paul Lawrie head a group at 7-under-par 209.
World No. 3 Ernie Els is knotted with four others at 6-under, while Padraig Harrington and three-time defending champion Montgomerie are among eight players tied at minus-five.
Full-field scores from the Volvo PGA Championship