Nilsson completed 54 holes at 4-under-par 209. He will go for his first tour win on Sunday. Nilsson, whose best finish was a tie for seventh at the Italian Open, has missed the cut in four of his seven starts this year.
Robert Coles fired the low of round of the day with his 5-under 66. That moved him from a share of 28th into a tie for second at minus-2, where he stands alongside Francois Delamontagne (67)
Nicolas Vanhootegem (69) and Liam Bond (70) are the final players in red figured at 1-under-par 212.
With many of the top players in the world playing the U.S. Open, the field this week was filled by players from the European Tour as well as the Challenge Tour.
Nilsson opened with 10 straight pars to remain at three-under. Several players tied him there, but Nilsson made his move around the turn.
He rolled in a birdie effort on the par-3 11th. Nilsson made it two straight with a birdie on the 12th on the Val Course at Aa Saint Omer Golf Club.
Nilsson parred his next four holes and led by as many as three, before trouble struck at the 17th. He struggled to a double-bogey to slip back to minus-3 and a one-shot lead.
However, Nilsson birdied the par-4 18th for the second straight day to push his lead back to two after three rounds.
'It felt great to make a birdie on the last hole, to make up for the disappointment of the double-bogey on 17,' Nilsson said. 'I had a really long putt from the top tier, hit it too hard, and the ball rolled off the green. I chipped back on and two putted, which at the time felt like a disaster.
'But it could've happened to anyone, so I forgot about it straight away, and focused again. Overall, I was really pleased with my game, although I didn't make nearly as many putts as I did yesterday.'
Coles had a great run on the front nine. He birdied the second, then ran off four birdies in a five-hole span from the fifth to jump to 2 under.
Around the turn, Coles faltered to a double-bogey at the 12th. He recovered one stroke with a birdie at 13 and got the other shot back as he birdied the par-three 17th.
'I've been really short of confidence,' admitted Coles. 'When you're not putting a run of scores together, it's hard to believe in yourself. Once you find some consistency, then obviously your confidence grows. But I haven't been able to do that, mainly because I haven't made many cuts. So it's been a slow season. But hopefully I'm peaking just at the right time.'
Delamontagne collected two birdies on both nines. His front nine birdies came at five and seven. On the back nine, he dropped in back-to-back birdies from the 11th to gain a share of second.
David Dixon and Steven O'Hara are tied for sixth place at even-par 213. Cesar Monasterio, Richard Bland, John E. Morgan, Richard Treis and first-round leader Roope Kakko are one shot back at plus-1.