Back in his native South Africa after graduating from the Nationwide Tour in America, the 33-year-old had five successive birdies from the 13th to move two in front - and that after starting the day six behind.
While Mulroy signed for an eight-under-par 64 and moved onto 15 under, compatriot Jbe Kruger saw his four-stroke overnight lead disappear with a 73.
Chilean Felipe Aguilar also overtook him with a 68 and Kruger is now three behind in joint third spot with fellow South African Hennie Otto and Scots Peter Whiteford and George Murray.
Whiteford matched Mulroy's 64, grabbing six birdies and an eagle on the long 13th, while Murray shot a 69 that was a real mixed bag.
He shared the lead after three early birdies, gave them all back around the turn and then climbed into contention again with three more birdies.
Mulroy has twice come close to winning the Joburg Open, another of the events co-sanctioned by the European and Sunshine circuits.
He lost a play-off to Richard Sterne in 2008 and then this January was beaten only by Charl Schwartzel, who three months later became Masters champion.
The Durban golfer, based in North Carolina since earning a PGA Tour card two years ago, was just part of the chasing back until he pitched to 10 feet on the 13th.
But he went even closer with his approach to the next, two-putted the par-five 15th and made putts of 12 and 14 feet on the following two greens.
Mulroy had to settle for par on the reachable 541-yard 18th - which features an island green - but that was better than Merrick Bremner, who came to the hole in solo possession of second spot, went into the lake and ran up a double-bogey seven.
It dropped the 24-year-old all the way to seventh.
Whiteford, who has missed the cut in seven of his last eight tournaments, followed his eagle with back-to-back birdies and then closed with an 18-foot putt for another.
Mulroy said: "I didn't make a lot of putts until that back nine. It was nice to see them start rolling in.
"I would've liked six in a row, but I had to lay it up (on the 18th) after my drive. It's a dangerous pin, so you just back off a bit.
"I suppose the best way to fix that would be to go out and get a birdie on my first hole tomorrow.
"I had a look at the leaderboard after the 11th hole, saw Merrick was at 12 under and said to my caddie that it would be nice to start making a few."
Kruger said: "I just couldn't hit it straight all day. I had no rhythm at all."