Scott Gibson and Darren Griff posted matching rounds of 7-under-par 65 to share second place. Wil Collins, Anthony Rodriguez, Brock Mackenzie, Michael Sims and Nik Tayler are one stroke further back at minus-6.
Steele played the back nine first in the opening round. He dropped a stroke on the 12th, but bounced right back with birdies on 13 and 14 at Glendale Golf & Country Club.
The 23-year-old birdied the 16th to make the turn at minus-2. Around the turn, Steele flew up the leaderboard. He birdied each of the first five holes on the front to jump to 7 under.
Steele, a native of California, closed with a birdie on the par-5 ninth to grab a one-stroke lead.
'I wouldn't want to be anywhere else,' stated Steele. 'I knew I was rolling it well and this game is a whole lot easier when the putter is working. There is so much talent out here, you better shoot 64 or 65 if you want to be near the lead. It's a good start, but there is a long way to go.'
Gibson, a big winner last year at the Barton Creek Austin Pro-Am, played the front nine in 4 under par with five birdies and a lone bogey at the third. He carded three birdies on the back nine to move into a share of second place.
Griff also started on the back nine. He was even-par through seven holes with a birdie and a bogey. Griff eagled the par-five 17th to turn at minus-2.
The 34-year-old ran off three straight birdies from the first to jump to 5 under. Griff joined Gibson in second place as he eagled the par-5 ninth.
'If you have a 60-foot putt and you get it to two inches, you're tickled. If it happens to drop in, you're ecstatic,' said Griff of his long eagle putt on 17. 'The 65 beats shooting seven-over, that's for sure. But I'm not going to get too jacked up. I'll go out and try to back it up tomorrow.'
Tour money leader Rob Oppenheim carded a 5-under-par 67 Thursday. He shares ninth place with Ryan Miller, Eugene Smith and Russell Surber. Dong Yi, Daniel DeLeon, Brian Flugstad and Alex Quiroz are one shot back at minus-4.