Pappas, who earned the right to compete on tour after finishing fifth on the Buy.Com money list in 2001, birdied six of his final nine holes en route to a 9-under-par 63. His 54-hole total of 19-under 197 left him tied with Kirk Triplett and Duffy Waldorf.
Brandel Chamblee, Cameron Beckman, Jerry Kelly and second-round leader John Senden were a stroke back at 18-under. Kelly won his first PGA Tour event last week at the Sony Open in Hawaii. Jay Haas was alone in eighth at 199.
The 34-year-old Pappas has never finished higher than 12th in a PGA Tour event and his 63 was six strokes better than his best round this year. A former college teammate of John Daly, who was in 13th place, Pappas won just once on the Buy.Com Tour last year but recorded seven other top-10 finishes.
Triplett posted a bogey-free round Friday that featured four birdies on the front nine and four on the back nine. He has just one win on tour -- the 2000 Nissan Open.
Waldorf, who had five birdies on the back nine Friday, is seeking his fifth tour title. The 39-year-old Waldorf has just one bogey over the first 54 holes.
There were 19 rounds of 66 or better fired Friday over the four courses used for the tournament.
Swim Week Miami Beach 2014 [PHOTOS]