Hoey carded a 66 at Carnoustie to finish 18 under par, while McDowell posted a third consecutive 67 at St Andrews to claim outright second on 15 under.
Former Open champion Louis Oosthuizen marked his return to St Andrews with a 69 to lie third on 14 under, with another Ulsterman, Rory McIlroy, among a seven-strong group on 13 under alongside world number one Luke Donald and the in-form Simon Dyson, who both shot 63 at St Andrews.
McDowell got the ball rolling for Northern Ireland with his US Open victory at Pebble Beach last year, following up by holing the winning putt for Europe in the Ryder Cup at Celtic Manor last October.
He was succeeded as US Open champion by McIlroy in June, while Darren Clarke won the Open Championship at Royal St George's a month later to give Northern Ireland their third major champion in little over a year.
Hoey has yet to hit those heights despite a successful amateur career which saw him play on the same victorious Walker Cup team as Donald in 2001, but the 32-year-old drew high praise from McDowell.
"Michael has always been a very talented player," McDowell said.
"He's a great ball-striker, a great swing. He has always had the talent and won the British Amateur in 2001 before playing on a winning Walker Cup side.
"It's a fine line between guys who go on to become the best in the world and guys who become journeymen pros. And you wouldn't say Michael is a journeyman, he's popped up twice and won on tour, and won well each time.
"When he applies himself and puts it all together he's as good as anyone out there. Why he doesn't put it together more often, who knows?"
Hoey himself gave the answer to that question, admitting: "I've probably just been really hard on myself. Trying to relax is obviously what I need to do and I've done that well so far.
"Golf is very mental, you have to accept poor shots. It's great to be in the lead in a really big tournament but there's a long way to go. Everything went very well today. My short game was unbelievable, the best it's ever been."
Despite the sunshine of the first two days giving way to damp, overcast conditions - play was suspended for an hour at Kingsbarns due to fog - low scoring was prevalent and the rounds of 63 from Donald and Dyson at St Andrews equalled the course record for the extended layout set by McIlroy in the Open last year.
"I'm very, very happy with the day," said Dyson, who has climbed to 30th in the world rankings after two wins this year.
"I didn't realise my birdie putt on the 18th was for the course record otherwise I might have hit it a bit harder.
"But Rory's is a good name to share the record with."
Dyson has won the Irish Open and the KLM Open this season and puts his improvement down to a renewed dedication to the game, which extends to becoming almost teetotal and hiring a full-time trainer.
"I'm going to be a dad in March so I said to my wife 'you're not going to be drinking so I will give it a go with you'," the Yorkshireman added.
"I'm quite enjoying how I'm feeling and the better results you get from doing this means there is no reason to change. Previously if I had a week off I would have a few nights out, but now I'm still practising and training.
"I also saw a nutritionist the week after the Open and she has got me on all sorts of stuff. Fitness is a big part of the game and you notice it playing with amateurs this week. I'm not saying they are unfit, but they are struggling at the end of the round, whereas the top pros are making birdies and making their charges."
McIlroy was left ruing a number of chances which went begging in the latter stages of his 66, but added: "As long as the guys don't get too far ahead I think I have a chance."
As for Northern Ireland's success, he added: "I don't know what it is. I don't know if it's just coincidence or if we're feeding off each other.
"I don't think it will last forever, but I hope it does. It's just a period where we are all playing well together, although English guys are number one and two in the world!"