The Australian was seven under through seven holes at En-Joie Golf Club on Friday. He holed five birdies along with an eagle from a bunker at the par-5 third on his way to a seven-under 30 on the front nine. Allan added birdies at Nos.12 and 18 to finish strong.
"On the third I hit it in the front bunker and the bunker shot went in," Allan said.
"Then I sort of kept hitting it close for a few holes. Then after that it was just hanging in there. Had a few rough holes but managed to escape and get out of trouble."
Allan will take a two-shot advantage over Doug Barron into the weekend as he seeks his second win of the season, following the Galleri Classic in March.
The Melburnian said having a win under his belt freed him up, "but it brings its own set of challenges" as well.
"You're sort of looking to get up there again and get into contention instead of just playing," Allan said.
"You've got to try and temper your expectations and just try to play. The old cliche of one shot at a time, one hole at a time kind of thing."
Compatriots Michael Wright and David Bransdon both made four-under 68 to sit tied 10th, while Greg Chalmers is a further shot behind.
Gordon Burns, meanwhile, had to engage his wife to caddie after a freak accident and she helped him to a tie for 10th with a four-under 68.
Barron opened his tournament with a hole-out for eagle at the par-4 first, and he was three under through two. Four birdies on his back nine helped him continue his climb up the leaderboard.
"The course was a little softer than I'm used to seeing," said Barron, who won the tournament in 2019 and also played the course in the PGA Tour's now- defunct B.C. Open.
"I never looked at the scoreboard really, but I know if I shoot 6, 7 every day, it's tough to beat you out there."
Tied for third at six-under 66 are Jerry Kelly, Jason Caron, Tim O'Neal, Shane Bertsch and Germany's Alex Cejka.
Irishman Padraig Harrington, who won each of the past three editions of this event, is not competing two weeks after he claimed the US Senior Open. Instead, he is playing the Scottish Open and next week's Open Championship.
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