David Eger and John Bland share fourth place at 6-under-par 65. Gil Morgan and Dana Quigley are one stroke behind that duo at minus-5.
Kite flew out of the gate on the back nine at TPC of Tampa Bay with a birdie at the par-4 10th. The six-time winner on the Champions Tour came back with a 10-foot birdie at the 12th.
The 54-year-old came back with a birdie on No. 13 and made it three in a row when he sank a birdie from six feet out at the 14th. Kite capped his opening nine with a birdie at the 18th to make the turn at minus-5.
Kite made it two straight when he rolled home a 12-footer for birdie at the first. The 1992 U.S. Open champion converted his seventh birdie attempt of the day at the sixth.
He closed out his bogey-free round by sinking a 10-footer for birdie at the par-four eighth.
'The course is out there for the taking, but it is playing pretty long,' said Kite, who hit 15 greens in regulation. 'I'm pretty pleased with my ball striking. It was a good solid round.'
Kite and amateur playing partner, Chris Sullivan, lead the pro-am portion of the event as well.
'Sullivan helped me four strokes and I shot 63,' Kite said. 'What he's doing for the Champions Tour is to be commended.'
Nelson got his round going with a 15-foot birdie at the second. He later made back-to-back birdies from the sixth to move to 3 under.
He continued his roll with a short birdie at the 10th. The 2003 Constellation Energy Classic winner came back with a five-footer for birdie at the 14th. Nelson climbed into second place as he birdied the 16th and 17th to get to minus-7.
'I'm really happy with 7 under today,' said Nelson. 'When you get to the course and your eight behind, it gets you in a mood where you have to make lots of birdies.'
McCullough opened with a birdie at No. 2 but stumbled to a bogey at the very next hole. He returned to red figures with a birdie at the par-4 fifth and moved to 2 under with a birdie at the eighth.
Around the turn, McCullough raced up the leaderboard. He sank a birdie at the 12th then converted back-to-back birdies from the 14th to get to 5 under.
McCullough converted a birdie attempt at the par-3 17th and made it two straight when he sank a birdie on the 18th.
Defending champion Bruce Fleisher posted a 4-under-par 67. He is joined there by Allen Doyle, Vicente Fernandez, Tom Jenkins, Mark McNulty, Bob Murphy, Tom Purtzer and Jim Colbert, who won here in 1992.
Dave Eichelberger, Joe Inman, Gary McCord, Isao Aoki and D.A. Weibring are one stroke further back at minus-3.