The American carded a three-under-par 69 at Shadow Creek Golf Course, leaving her at eight-under 136.
Hyo Joo Kim kept alive her hopes for a third straight LPGA Tour tournament victory, shooting 73 to match Leona Maguire (71) at three under.
Coughlin entered the day in a three-way tie for the lead after opening with a 67, but now has clear separation. She nearly won here last year when it was a match-play event before falling to Madelene Sagstrom in the final pairing.
Now Coughlin is close again. Even with a sizable lead, though, she isn't ready to celebrate.
"There is a lot of golf to be played," Coughlin said. "As you can see, you can make big numbers really easily. So just try to stick to what I've been doing the last two days and see what happens."
Wind gusts of 20mph (32km/h) and higher made for a difficult round. A day after 26 players posted red numbers, that total was 11 on Friday, making the picturesque but demanding course even more difficult.
"It's almost bordering on a US Open-style setup," Maguire said. "You see how few people are under par. It feels a little bit like a major without being a major."
Miyu Yamashita experienced that. Sitting at five under with two holes to play, she went in the water on the par-3 17th and then took three shots to get on the green. The triple bogey put her at two under with second-ranked Nelly Korda (74) and Nanna Koerstz Madsen (70).
Korda, who won this event two years ago, struggled over the final nine in the second round. She bogeyed two holes and had a double on the par-4 first.
The top 20 players in the world signed up for the Aramco Championship, no doubt attracted to the $4 million ($A5.8m) purse in the first year that this tournament is strictly stroke play. This event is co-sanctioned with the Ladies European Tour.
Grace Kim's second consecutive 72 kept her at even par and moved her up to tied 11th in the field.
One shot behind the Australian is compatriot Gabriela Ruffels (74) at two over in a tie for 20th.
Big guns and major winners Hannah Green (75, 77) and Minjee Lee (79, 75) both missed the seven-over cut.
New Zealand's Amelia Garvey made the largest leap, answering an opening 79 with a 69 even with a triple bogey on the par-3 17th. That got her to four over.
"I actually played really well yesterday," Garvey said. "I just couldn't putt. Was putting a bit like Stevie Wonder out there."
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