Slattery, who also led at the midway stage after opening rounds of 67 and 66, collected birdies at the sixth, 13th and 15th to finish 14 under par.
The 33-year-old, who lost his card by just £66 in 2007, is seeking his first European Tour title after starting the week 136th on the Race to Dubai.
Australian Brett Rumford and Italian Lorenzo Gagli lie joint second on 12 under.
The duo had contrasting rounds today, with Rumford shooting a consistent 68 that included five birdies and only one dropped shot, whereas Gagli picked up an eagle and five birdies but also carded four bogeys in his 69.
Three players are tied for third spot on 11 under, with Cesar Monasterio and Oscar Floren both carding five-under-par rounds of 67 today to climb up the leaderboard and move level with Ryder Cup player Francesco Molinari, who slipped back after a 71.
Spaniard Eduardo De La Riva, making his second European Tour appearance of the year, had led at the midway point of the third round but fell away after dropping three shots on the back nine - including a double-bogey six at the 17th.
That saw him card a 72 and leaves him in seventh place overall, four shots off the lead.
World number one and defending champion Luke Donald also struggled on the closing holes once again to see his hopes of victory take a dive.
After making four birdies to reach 10 under by the 11th hole, Donald dropped shots at the 14th, 16th and 18th - the third time in succession he has bogeyed the final hole - and although he picked up a birdie at the 17th, he finished with a two-under 70.
That left the Englishman down in joint 10th spot, six shots behind countryman Slattery.
Slattery said on www.europeantour.com: "I just played really steady. I didn't make too many mistakes.
"I probably could have holed a few more putts, I left a few out there. At the turn I just felt a little bit more relaxed and played really nicely coming in."
Slattery could secure himself a European Tour berth for next season with a victory in Madrid, but he is trying to stay focused on the task at hand rather than thinking about the wider implications.
"It's all about not thinking about the big picture," he said.
"It's very hard to do - if you say don't think about a pink elephant you automatically think of that but there are techniques you can use to switch off.
"This is why we play the game. It doesn't get much better than this where you can play in front of fans in great weather on great courses."