Matthew birdied the final two holes with putts of 25 feet and 12 feet to move to 6-under 210 for the tournament.
"It was just great to hole two putts on the last two holes and get in with the lead," said Matthew, who again had four birdies and two bogeys. "There are a lot of good players just kind of lurking behind me."
Matthew joined the LPGA Tour in 1995 and did not break through for a victory until last year, when she won the Hawaiian Ladies Open. She finished 10th on the money list in 2001 and is 29th this year.
Mallon fired a 69 on Saturday, but finished her round with a bogey on 18.
"I hit 15 greens today, but on the last hole I missed it," Mallon said. "I hit a pitch and run and had one probably at about 12 feet and missed that. Made a bogey there. That was my only one of the day."
With nine come-from-behind wins in her 13 tour victories, including this event in 2000, Mallon is well positioned for another win here.
"I love Montreal," Mallon said. "I have dear friends that have lived here a long time, so I always relax here and enjoy visiting with them. It feels like home a bit."
Australian Karrie Webb and Charlotte Sorenstam of Sweden were tied at 2-under. Webb won last week's Women's British Open.
The wind was again a major factor on Saturday at the 6,435-yard Sumerlea Golf and Country Club course and the forecast for Sunday is for isolated showers and thunderstorms by late morning with wind gusts of 25 miles per hour.
"Anybody within seven shots of the lead has a chance if the wind comes up," Ellis said. "This is one of those courses."
Notable deaths of 2014 [PHOTOS]