Scott had a 15-under 201 on the oceanside links-style New South Wales Golf Club. Australian Nick O'Hern was third following a 71, seven strokes behind Scott.
Australian James Nitties was fourth after a 70, eight strokes back. American David Oh (69) and Australian Scott Strange (68) were tied for fifth, nine strokes behind Scott.
American John Daly shot 78, moving from a tie for 10th after the second round to a tie for 36th. His second-round 69, completed Saturday morning, enabled him to make the cut
- something he hadn't achieved in all three Australian tournaments he played in last year: the Open, PGA and Masters.
Scott has never won a professional tournament in Australia.
"It's there for me with a good round tomorrow," Scott said after birdies on his final two holes.
"For an Aussie it's like the next major in a sense. It'd mean a lot to me at any point but it'd be great coming off a pretty ordinary year. If I had the chance to win I'd certainly savor it for a while."
Scott had back-to-back bogeys on the 15th and 16th holes. They were his first blemishes in a bogey-free 39-hole stretch spanning the first and third rounds.
Scott is anticipating another duel with Appleby in the final round.
"It was great to see us both go out there and play good today," he said. "We're a fair way out in front and it could be us getting the gloves off and having a bit of a ding-dong (battle) tomorrow hopefully."
While he will be anxious about what Sunday holds, it should not prevent Scott from sleeping.
He had a 4:15 a.m. wake-up call on Saturday so he could finish the final 12 holes of his second round before beginning his third.
"There aren't too many 4:15 calls, not even for a surf," he said. "That's an early one. I should've slept in the clubhouse."
