The Orlando-based golfer, who had a 71 in first round, took his two-day total to 141 but still missed the cut which went at four-under 138 on Friday.
It was Atwal's first missed cut after a series of five cuts he made in last five starts.
Atwal birdied the first and fifth but gave away his only bogey on seventh and the rest were pars.
Troy Matteson shot a 3-under 68 for a one-stroke lead over Jeff Maggert and Brian Harman after two rounds.
Maggert's bogey-free round of nine-under 62 moved him from 39th place after the first round to a tie for second. He birdied half the holes at TPC Deere Run, including five of his last nine.
Harman had a second straight 65, the last two of his seven birdies coming after a 48-minute thunderstorm delay.
Matteson bogeyed the par-4 18th after getting four birdies in the first 17 holes.
JJ Henry, Gary Christian, Robert Garrigus and Rickey Barnes are tied for fourth at 11-under 131.
A trio of players are at 10-under 132, including three-time defending champion Steve Stricker, whose 4-under 67 placed him within striking distance with 36 holes to play.