One stroke off the pace after the opening round, Campbell and Smail thrived under the foursomes format and moved to 15-under 129 through 36 holes at the Taiheiyo Club.
The duo of Shigeki Maruyama and Toshimitsu Izawa thrilled the home crowd with a 69 that gave Japan a share of second place at 11-under 133. First-round leaders Andrew Coltart and Dean Robertson of Scotland could not match their opening-round 62 but stayed within striking distance with a 1-under 71.
The world's first- and fourth-ranked players were penalized Thursday for taking an illegal practice putt. But they climbed within five shots of the lead and are tied with the Danish duo of Thomas Bjorn and Soren Hansen and the Spanish team of Sergio Garcia and Miguel Angel Jimenez.
Last year, Woods and Duval overcame host Argentina, which was represented by Angel Cabrera and Eduardo Romero, to capture the inaugural event. Cabrera and Romero are among five teams tied for seventh at 9-under 135 after a 68.
Among those trying to unseat Woods and Duval were 30 European Tour members who combined for 21 wins this season.
The World Cup is the fourth event in this year's World Golf Championships and the third since the Sept.11 terrorist attacks on the U.S. Woods won the last of his five 2001 titles at the WGC-NEC Invitational in late August. He tied for 13th at the season-ending Tour Championship.
The winning team will share $1 million -- one-third of the total purse.
The 7,232-yard, par-72 Gotemba Course is considered one of the top facilities in Japan.