Two-time winner Juli Inkster fashioned a round of 4-under 67 to share second with Diana D'Alessio and Michele Redman, who each carded rounds of 5-under 66 on Saturday.
Annika Sorenstam, the defending champion, fired a 5-under 66 Saturday and is part of a group in ninth at 6-under par.
Michelle Wie, the 13-year-old amateur who won her first USGA title last week at the Women's Amateur Public Links, shot a 1-over 72 and finished on the cut line at 1-over-par 143.
'I played very bad and I missed a lot of putts,' said Wie. 'Everything didn't work out, but my fairway woods and my driver were okay. I putted very badly today.'
Stanford started quickly with an eight-foot birdie putt at the first hole but cooled off considerably on the rest of the front nine. She parred the last eight holes on her front side to stay near the top of the leaderboard.
Stanford, who shared the first-round lead with Laura Diaz and Kris Lindstrom, got back into red figures again at the 10th when she knocked a 7-iron to 10 feet and holed the putt.
The 25-year-old from Texas missed a 15-footer for par at the 11th but rebounded with a seven-foot birdie putt at the next.
Stanford closed her round out in style by taking advantage of the remaining par-5s. She birdied the 481-yard 16th and polished off her round of 67 with a 15-foot birdie putt at 18.
'I'm happy with the way I hit the ball,' said Stanford. 'I hit 15 greens today, 12 fairways and got up and down all but one time. I'm so much happier with the way I hit the ball today.'
Stanford is winless since joining the tour in 2001. She finished second behind Se Ri Pak last year at the Betsy King Classic but the Texas Christian graduate is ready for Sunday, win or lose.
'I'm excited because I believe you learn how to win, at any level,' said Stanford, who intends to relax on the blackjack and roulette tables in Atlantic City Saturday night. 'So, I think I get to learn a lot tomorrow. I get to learn what it's like to be in the final group. I've never been in the final group on Sunday.'
Inkster mixed six birdies and a bogey through her first 16 holes Saturday and was alone in the lead at 10-under par until problems at the par-4 17th. She hit a wedge over the green into the back bunker and failed to get up and down for par.
'Basically, I didn't drive the ball as well as I drove yesterday,' said Inkster. 'I hit the rut a few more times but I did hit some good shots there. I need to gear down a little.'
D'Allesio looked to be in trouble after a disastrous double-bogey at the 15th but she responded in a big way. She reached the green in two at 16 and two-putted from 45 feet for birdie. D'Alessio drained a 30-foot birdie at the 17th and closed her round with a four-foot birdie putt at the last.
'I was pretty focused. I try not to get down on myself,' said D'Alessio. 'I thought I could birdie the last two holes. I just think more positively, walk with my head up and shoulders back.'
Redman caught fire late on her back nine Saturday. She birdied 14 and 15 then holed a 15-foot eagle putt at 17 to get within two shots of the lead. Redman played a seven-wood on to the green with her second shot at 18 and two-putted from 20 feet for birdie and a share of second place.
'I hit the ball really good today,' said Redman. 'I played the par-fives really well. I think I have a few things straightened out now because I think I'm hitting it really good.'
Becky Morgan and Joanne Morley are tied for fifth place at 8-under-par 134, followed by Lorie Kane and Heather Bowie, who share seventh at minus-7.
Diaz shot an even-par 71 and is tied for ninth at 6-under par, while Lindstrom stumbled to a 3-over 74 and is tied for 19th at minus-three.