Walton, who is going for his first tour title, completed 54 holes at 14-under-par 199. He is making just his second start on tour this year.
'I've always said that it doesn't matter what tour I am playing as long as I feel I am continuing to improve as a golfer,' said Walton, who has been on the Canadian Tour and Golden State Tour this year. 'The name of the tournament may change, but I treat every event the same no matter what tour I am playing. I've played really well all year. I've been putting myself in good position.'
Bradley Hughes and 1999 champion Brad Elder, who were the second-round co- leaders, both managed rounds of even-par 71. They were joined in second place at minus-13 by Scott Gardiner (67), Vance Veazey (68) and David McKenzie (68).
Ryan Hietala, Rich Morris and Marc Leishman were one stroke further back at minus-12.
Walton got off to a hot start with birdies on the second and third on the North Course at Crestview Country Club. He also birdied the seventh to make the turn at 12-under.
He parred five straight from the eighth, before dropping his only shot of the round on the par-4 13th. Walton atoned for that error with a birdie on 14.
Walton also birdied 16 and 18 to move one clear of the field after three rounds. His best previous finish on tour was a tie for fifth at the 1998 Carolina Classic.
Elder carded three bogeys, a double-bogey and five birdies in his round of 71. Hughes, the 2004 champion, had three birdies and three bogeys in his round.
'I think I played good enough today to score better,' Hughes admitted. 'I hit some good shots that the wind killed. I do enjoy playing this golf course. The year I won here, the wind was blowing as well in the same direction. So I know how to play, it's just a matter of getting the right clubs in my hand and executing my shots.'
McKenzie was the only player in the top six that was bogey-free. He posted birdies on the third, 10th and 14 to go with 15 pars.
Gardiner had two bogeys and six birdies, while Veazey notched five birdies and a pair of dropped shots.
Jeff Klauk, Mark Walker and Martin Laird share 10th place at 10-under-par 203.