The 20-year-old went into the week just focused on securing his European Tour card for next season, lying 112th in the Race to Dubai standings with the top 115 earning another year on tour.
But he leads by four shots after rounds of 66 and 67 at Lake Karrinyup and is now able to aim higher.
"I think I hit it better yesterday than today but a couple of eagles and a hole-out from the bunker helped a lot," he told the European Tour website.
"I just want to have a good week. My goal this week was having a good one to keep my card for next year. If I can win, awesome."
Both eagles came in a spectacular front nine as Grillo holed from a greenside bunker at the third before his second to the par-four ninth spun back into the hole. His five-under-par round also featured three birdies and two bogeys.
American Bo van Pelt and home player Jason Scrivener are Grillo's nearest challengers at seven under, Van Pelt recording an eagle and five birdies in a 67 today while Scrivener's 69 contained five birdies and two dropped shots.
Another Australian, Max McCardle, is at six under alongside New Zealand's Michael Hendry, American Ryder Cup player Jason Dufner and Alejandro Canizares of Spain.
England's David Howell shot 68 to reach five under, in a large group sharing eighth place, and was keen to capitalise by sealing a place in the end of season DP World Tour Championship near his home in Dubai.
Howell is 71st in the Race to Dubai and a top-five finish in Perth would leave him in a top-60 place and on track to qualify.
"I have been working really hard to make the top 60 and I've played really consistently the last two or three months without any particularly good finishes," he said.
"I'm going to have to have at least one good one if I'm going to make it, so hopefully I'll have a crack at it at the weekend.
"I live five miles from the course in Dubai and I've missed out the last few years, which is a bit frustrating."
Compatriots Robert Coles and Richard Bland and Australians Peter Cooke and Stephen Dartnall are also at five under.
Former world number three Paul Casey briefly held a share of the lead before slipping back down the leaderboard.
Casey carded an opening 67 to lie two shots behind joint overnight leaders Hendry and Canizares and after two birdies in his first six holes on Friday, the former Ryder Cup star found himself in front.
However, Casey then dropped a shot at the 18th, his ninth hole, and worse was to come with a double-bogey six at the second. Another six followed on the par-five third and when he also bogeyed the fifth, Casey was on his way to an inward half of 40 and a halfway total of two under par.