Tseng, the world No. 1 and defending champion, finished the day with a two-shot lead at 12-under 204. She posted six birdies and no bogeys while charging back from three shots down to the start the third round.
She is seeking her fourth major championship.
Second-round leader Stacy Lewis was second after registering a 1-under 71 at Mission Hills Country Club.
Alone in third at minus-8 was 2007 winner Morgan Pressel, who shot a 3-under 69. Michelle Wie carded a 69 to move into fourth at minus-7.