Green put together a stunning start to his round, collecting nine birdies through the first 11 holes.
The 53-year-old Victorian lefthander recorded a double bogey at the par-3 12th but got back on track with birdies at Nos. 15 and 18 to sit at 13-under 127 for the tournament.
"That was fun. You know, it's been in the making for a while now, a really hot round like that," said Green, who was second in the Senior PGA Championship and third in US Senior Open among six top-10 results this season.
"I just haven't been able to get the putter going, and today I did. The putts were going in just as I was seeing them, which was nice.
"It was a shame that 12 happened to me, but would've been nice to progress on from that great run of birdies and continue on and try (to get) an even better score."
Boo Weekley and New Zealand's Steven Alker are one shot back in a tie for second after shooting matching 63s at Canyon Meadows Golf & Country Club.
Ken Tanigawa had low-round honors with a nine-under 61, moving him 36 spots up the leaderboard and into a tie for fourth with Irishman Padraig Harrington (64) and Jason Caron (64), who were two strokes off the lead.
Steve Allan (65) was next best of the Australians, tied ninth and four shots behind Green. Cameron Percy was tied 22nd at six under after a 63 with Greg Chalmers (76) a shot further back along with David Bransdon (66) and Stuart Appleby (69).
Rod Pampling (69) was at four under while Michael Wright (66) and Jason Norris were three under.
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