The Australian, coming off a victory last week in the Nedbank Challenge in South Africa, had a 54-hole total of 9-under 204 on the Hyatt Regency resort course.
Australians Scott Strange (68) and Greg Chalmers (67) were tied for second.
Michael Sim - who had six birdies on the back nine for a 65, the best round of the day
- was two strokes back along with Australian Open winner Adam Scott (68) and defending champion Geoff Ogilvy (70).
"I played pretty solid all day," Allenby said. "It could have been better, but it should be quite a finish tomorrow with that leaderboard."
Ogilvy, the 2006 U.S. Open winner, agreed.
"There are five or six guys who could go 5 or 6 under tomorrow, and someone probably will," Ogilvy said. "I've never successfully defended a tournament, so it would be nice to do it Sunday."
Most of the buzz on and off the course came from news that Tiger Woods was taking an indefinite leave from golf to try to save his marriage. John Daly, who shot a 72 and was nine strokes off the lead, said he hopes the tour gets him back soon.
"He is trying to save his marriage," said Daly, who has had his share of marital problems and issues off the course. "My advice to him last week was that he should have come out a lot earlier ... told the truth, got it all out on the table."
Paul Gow of Australia shot a third-round 73, not bad for a guy who didn't think he had made the cut. He flew back to Sydney
- a 90-minute trip - from Coolum on Saturday afternoon after finishing at 4 over and seeing the projected cut was 1 over.
But the cut remarkably moved to 4 over, so Gow had to catch a later flight from Sydney for the 600-mile trip north.
"What an idiot," Gow said. "We even got back in the same (hotel) room. Got back here just before 10 p.m., so it wasn't bad as I was actually in bed and asleep in time."
