Yang finished day three at seven-under 209 at Sahalee Country Club east of Seattle, remaining steady around the greens on the tree-lined course that requires utmost accuracy and precision.
"I grew up watching so many great players in the past, and I saw them winning all the major championships," Yang said.
"I dreamed about playing out here because of them. I worked hard for this.
"It'll mean a lot, but we've still got 18 more holes out there and that's a lot of golf left for a major championship."
The 34-year-old South Korean player has five LPGA Tour victories, the most recent in November in the Tour Championship.
US golfer Lauren Hartlage and Japan's Miyu Yamashita were tied for second.
Hartlage shot her second straight 69 for the only bogey-free round of the day, while Yamashita had her second 70 in a row.
Sarah Schmelzel, the American who shared the second-round lead with Yang, shot a 74 to drop to four under.
One of the biggest movers in the second round, Australia's Steph Kyriacou dropped out of contention with a six-over 78.
Kyriacou's horror round included five bogeys and a double on the par-4 8th, before she finished with a birdie at the last.
Hannah Green (73) joined Kyriacou in a tie for 43rd at five over, while double major champion Minjee Lee (72) is the highest-ranked Australian in a share of 25th - nine shots off the lead.
First-round leader Lexi Thompson had a 73 to drop into a tie for fifth with Lilia Vu (68), Caroline Inglis (69), Jin Young (73) and Hinako Shibuno (73).
The 29-year-old Thompson, who last week lost in a playoff to Vu in the Meijer LPGA Classic, recently announced this season will be her last playing a full schedule.
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