Saturday's third round set up an enthralling finale on home soil on Sunday between the major-winning South African pair.
Former British Open champion Oosthuizen tied the course record at Leopard Creek Country Club with a nine-under-par 63.
Schwartzel, Masters champion in 2011, showed his command of the picturesque course, which borders Kruger Park, with a third-round 65 for a 15-under-par three-round total of 201.
Oosthuizen, who began the day four shots off the lead, stormed up the leaderboard. He sunk two birdies and an eagle going out and then took the clubhouse lead with five birdies on the back nine in a blemish-free round on a blisteringly hot day.
The 41-year-old, who won his British Open title in 2010, then watched as Schwartzel hit an eagle and four birdies in his last seven holes to claim a share of the lead.
Schwartzel, 39, has won three times previously at Leopard Creek and been the runner-up at the tournament on a further four occasions.
The pair are five strokes ahead of third-placed Christiaan Bezuidenhout and Andy Sullivan, 10-under-par after three rounds.
South African Bezuidenhout, who won the tournament three years ago, went around in 68 on Saturday while former Ryder Cup golfer Sullivan eagled the 18th hole for a back-to-back 69.
One shot further back are England's Marco Penge, who won his tour card last month, and Ashun Wu of China. Penge was one shot off the lead overnight and hit five birdies and five bogeys in his third-round 72.
Overnight leader Casey Jarvis of South Africa dropped to eight under par after a third-round 74.
New Zealand's Sam Jones is four under par after he shot a 70.
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