Mark James carded his second straight 5-under 66 to take second place at minus-10.
Jay Haas also shot 66 to move into third place at 9-under-par 133, while Bruce Fleisher, first-round leader John Harris and Dan Pohl are one stroke further back at minus-8. Fleisher was buoyed by an ace on the par-3 ninth.
Harris is looking for a big week as the top-30 on the money list get to play in the Charles Schwab Cup Championship next week. He is currently 33rd on the money list, while Haas (30) and Pohl (38) are fighting for the top-30 as well. Fleisher is secure at No. 19.
Quigley, who leads both the Charles Schwab Cup Points race and the money list, posted just one birdie over his first six holes. He caught fire around the turn at Oak Hills Country Club.
The 58-year-old dropped in back-to-back birdie putts from the seventh. Quigley kept going as he drained a 12-footer for birdie on nine. He came right back with another 12-foot birdie putt on the 10th to get to 10 under.
Quigley's momentum was halted with a par on the 11th. The 10-time winner on the Champions Tour birdied the 12th and 13th to move to 11 under. He stumbled to a bogey at the par-4 14th. Quigley, who won here in 2002, got that stroke back with a 10-foot birdie putt on the par-4 17th to grab the second-round lead.
'I've got a great mindset for this course,' said Quigley, who has 13 top-10 finishes this year. 'I hit driver an awful lot here. It's worked before. I told myself all week I was going to get good breaks. I want to tidy up everything before the Schwab Cup.'
Quigley leads Hale Irwin by 261 points in the chase for the Charles Schwab Cup, a season-long points race in which the winner earns a $1 million annuity.
'I'm glad to be in the Schwab Cup lead, but its all going to come down to next week,' Quigley said. 'I've held the lead for 19 weeks. I've already pledged the money to charity. I want to do the same thing as (Allen) Doyle.'
James played the front nine at two-under with birdies on the third and fifth. He did catch fire around the turn before struggling late.
The Englishman birdied the 10th and 12th to move to minus-9. James birdied three straight holes from the 14th to jump to the lead at 12 under. The 2004 Senior Players Championship winner however bogeyed each of his last two holes to end one behind Quigley.
Scott Simpson missed the course record by one stroke as he fired an 8-under 63 to move into a tie for seventh. He was joined at 7-under-par 135 by Gil Morgan, Morris Hatalsky and Lonnie Nielsen. Tom Jenkins, Jerry Pate, Andy Bean and Jim Thorpe are one shot further back at minus-6.
Mark McNulty, the defending champion, is tied for 15th at 5-under-par 137 after a second-round 72.