Steven Bowditch managed a 1-under 71 to finish one shot back at 9-under-par 135 along with Jeff Gove. Camilo Villegas and Jon Mills were next at 8-under-par 136.
O'Malley, the 2002 champion, picked up a quick birdie at the par-5 10th, his first at Clearwater Golf Club. O'Malley then birdied two in a row starting at the par-4 13th, but struggled to a bogey at the par-4 17th.
The Australian recovered with a birdie at the following hole to make the turn at 9 under and collected another birdie at the par-4 seventh for his share of first.
'I played nicely today, same as yesterday,' said O'Malley. 'I feel good, I'm hitting the ball nicely and controlling the flight well.'
Lyle tallied three birdies over his first five holes and added a birdie at the par-3 ninth to reach minus-9. The Australian cooled down on the back nine, however, and managed a birdie at the 16th for a round of 67.
'I hit it reasonably straight,' said Lyle. 'Just try to drive it as straight as possible and hit as many fairways as possible and give yourself opportunities to hit greens.'
Bowditch, coming off his victory last week at the Jacob's Creek Open, had a hot start with back-to-back birdies from the first but fell back to eight- under with a double bogey at the par-5 fifth.
He grabbed a share of the lead with birdies at 12 and 14, but a bogey at the closing hole left him one shot off the pace.
Brandt Snedeker, Johnson Wagner, Jason Schultz and Jim McGovern share seventh place at 7-under-par 137. Brent Schwarzrock, Jaxon Brigman and David Smail were one shot further back along with former U.S. Amateur champion Ricky Barnes at 6-under-par 138.
The 36-hole cut fell at 2-under-par 142 with 63 players qualifying for the weekend. Among the less fortunate were Bill Haas and 2003 U.S. Amateur winner Nick Flanagan.