Cristie Kerr, Leta Lindley and two-time LPGA Championship winner Se Ri Pak finished tied for third at 11-under-par 205 while Vicki Goetze-Ackerman was one shot further back at 10-under-par 206.
Sorenstam was part of a logjam one stroke behind overnight leader Karine Icher before stepping onto the first hole at Evian Masters Golf Club.
She landed a pitching-wedge inside five feet for birdie at the opening hole and ran home an eight-footer for another birdie at the second. Sorenstam made it three in a row after she hit a nine-iron within 11 feet of the cup at the third to move to 12-under and quickly turn a one-stroke deficit into a two- shot lead.
The Swede, who had struggled with her putting during the opening rounds went on to par the next eight holes before going on another birdie tear.
'My caddie gave me a little putting tip yesterday,' said Sorenstam. 'He told me to grip down a little bit to make the ball skip early, roll on top a little sooner than normal. I guess it worked!'
At the 12th, Sorenstam drained an 11-footer for birdie and hit a five-iron off the tee at the par-three 14th to nine feet for another birdie.
Sorenstam hit a sand-wedge inside three feet of the hole at the 16th and made it two in a row with an eight-foot birdie at the 17th to climb to 16-under.
The 31-year-old still had the par-five last to play, a hole she birdied in each of the previous two rounds. She was forced to lay up after her drive missed the fairway. Her third shot found the fringe at the back of the green and she was able to get up and down for par and a flawless round.
'I'm very pleased with the result,' said Sorenstam. 'I got off to a hot start with those three birdies, and then I played so-so in the middle of my round. But I was able to turn it around and play really solid on the back.'
Sorenstam shattered the previous scoring record by five strokes and will carry a comfortable advantage into the final round in search of her fifth LPGA Tour victory of the season.
Kim collected five birdies and one bogey on her round to finish alone in second at 12-under-par 204. Her only mistake came at the par-five seventh after she failed to save par from 20 feet. Kim responded with a birdie putt from the same length at the very next hole on her way to a round of 68.
Icher pulled within one of Sorenstam's lead on the front nine with a birdie at the seventh. However, the 23-year-old faltered on the inward nine with a bogey and a double-bogey to drop to minus-eight. Icher recovered with a birdie at the last to finish at nine-under-par 207.
Wendy Ward posted a round of five-under 67 to finish alongside Grace Park at eight-under-par 208.
Laura Diaz, Jackie Gallagher-Smith, Mhairi McKay and Maria Hjorth were tied for 10th at seven-under-par 209.