The 26-year-old American fired one of only two bogey-free third rounds at Wilshire Country Club to stand on nine-under 204 after 54 holes.
Australian Hannah Green birdied five of the last six holes to shoot 69 and grab a share of second on 206 with South Korea's Ryu Hae-ran, who carded a 67.
Scotland's Gemma Dryburgh was fourth on 207 after a 66, one stroke ahead of China's Lin Xiyu and India's Aditi Ashok, the 36-hole leader.
Knight opened with eight pars before closing the front nine with a birdie, then grabbed the lead with her sensational eagle at the par-5 13th and sank a 10-foot birdie putt at the 17th to stretch her lead.
"I feel like it's pretty solid tee to green," Knight said. "It was playing pretty tricky today with the wind and the greens got really firm so I just plodded my way around and stayed patient.
"Always could make a few more putts but I'm giving myself opportunities so that's all I can ask."
World number 60 Knight, who has never before led an LPGA event after 54 holes, won her only LPGA title as a tour rookie at the 2019 Volunteers of America Classic.
"This is why I practice," Knight said.
"I want to be in these positions.
"In 2019 I just embraced it and that's what I'm going to do tomorrow.
"The pleasure of competition should be more than the pressure so I'm just trying to hone in on that."
Green's impressive finish, punctuated with back-to-back birdies on 17 and 18, salvaged a round that also included a bogey at eight and a double bogey at 11.
"I knew there were some holes coming in that I could possibly make some birdies but to birdie 17 and 18 was obviously a really great finish and I'm really excited for tomorrow," said Green, whose two LPGA titles both came in 2019 and included a major at the Women's PGA Championship.
Ashok slips with 72
Green played in last year's final group on Sunday and expects that to help her down the stretch this time.
"It helps knowing what the course will be like late in the afternoon," she said. "Greens will get a little bit slower, a little bit bumpier, so hopefully that experience from the last couple years helps me to try and get on top tomorrow."
Ryu answered a bogey at 11 with birdies at the par-5 13th plus the 14th and 16th, the last on a chip in.
"If I win this tournament in my rookie season, that's going to be an honor," Ryu said.
Ashok struggled to a 72, the only player in the top 15 to finish over par on Saturday. She answered a bogey at six with a birdie at the par-3 seventh but also bogeyed 11.
"It was OK. Everything was really average," Ashok said. "I holed some good par putts but I missed a few too."
Ashok, who won her fourth Ladies European Tour title in Kenya in February, still seeks her first LPGA crown.
