Winless since her only career title at the 1999 Corning Classic, Kuehne moved to 8-under 134 for the tournament. She was two strokes in front of Chris Johnson, who also shot a 65 Friday.
It is the first time Kuehne has led an event since the third round of the 2000 Corning Classic.
"I love it. It's position I love to be in," Kuehne said. "I haven't been there in a while. I feel like I've put myself in really good position and I love where I am.
"But my goal, I want to make the Solheim Cup. That's where my head is. I want to win, don't get me wrong, but the Solheim Cup is the overall picture of what I want to do."
Kuehne has some work to do if she wants to qualify for the United States' Solheim Cup team, which is chosen following the State Farm Classic on Sept. 1.
Ten players qualify for the team by earning points for wins and top-10 finishes over a two-year period with two players selected by the captain. Kuehne, who has four top-10 finishes this season, is 12th in the standings.
Four-time Player of the Year Annika Sorenstam, who already has won six times in 13 starts this season, was lurking three shots back. Korean Hee-Won Han also was three shots out of the lead.