Overnight co-leader Tom Jenkins shot a 1-over 72 in the second round and is tied for second place. Bruce Fleisher (70), Bob Gilder (66) and Morris Hatalsky (67) joined Jenkins at 5-under-par 137.
Reid took advantage of the par-5 opening hole when his three-wood second shot landed in the front bunker. He blasted out to 12 feet and converted the birdie try.
The 50-year-old tour rookie birdied the par-5 fourth, but made a mess of the par-3 fifth. Reid's 5-iron landed 60 feet from the hole and he three-putted for a bogey. He hit a 9-iron to 14 feet to set up a birdie at the seventh and made the turn at 2-under 33.
At the par-5 13th, Reid hit a 5-wood to 5 feet and rolled in the eagle putt. He parred his next three holes, then reached the green in two at the par-5 17th. Reid two-putted from 40 feet to polish off his round and take his two-shot edge.
'The round today hinged on the par-5s,' said Reid. 'I took advantage of those today and played the rest of the golf course well enough. I'm pleased with the round.'
Reid was not sure if he would ready to play this week after an amazing Sunday afternoon last week. Reid trailed Jerry Pate by three shots on the 72nd hole, but eagled and when Pate made bogey, it was on to a playoff.
Reid birdied the first extra hole at Laurel Valley and collected not only his first Champions Tour major, but his first victory. Now, he has a chance to become the fourth multiple winner this year on tour and the second to win back-to-back events after Jim Thorpe turned the trick last month.
'I was a little concerned coming into this week that I wouldn't be focused,' admitted Reid. 'I knew I've been playing well. Once I got a few holes in on Friday, I found myself focusing so that was good. This course forces you to pay attention.'
Jenkins was even on his front nine, but a lone bogey at the 12th dropped him into a share of second. Fleisher collected two birdies and a bogey on the front nine, but parred his final 11 holes.
Gilder made the turn at 2 under and flew up the leaderboard with his play early on the back nine. He drained a 15-foot birdie putt at 10 and a 10-foot birdie putt at 11 to reach 4 under for the championship. Gilder two-putted for birdie at the 13th to get into the logjam in second.
'I'm looking forward to seeing how I do on this course tomorrow,' said Gilder, who switched to the claw putting grip on Friday. 'Six birdies, I'm happy with that.'
Hatalsky tallied four birdies in his round, but seemed to be in trouble at the 16th. He rolled in a 10-foot par save to finish off his bogey-free round.
Defending champion D.A. Weibring shot a 4-under 67 and is tied for sixth place with Gil Morgan (67), Mike McCullough (68) and James Mason (69). The group is knotted at 4-under-par 138.