The 33-year-old from South Korea began the day tied for the lead with Lauren Coughlin but then proceeded to shoot a five-under-par 67, which turned out to be the low round of the day, to rise to 11-under 133.
Germany's Esther Henseleit is a distant second at six under following a round of 68.
South Korea's A Lim Kim (72) sits in third at five under, while Coughlin struggled to a 74 to drop into a tie for fourth at four under with Japan's Erika Hara (70), and Thai duo Patty Tavatanakit and Pajaree Anannarukarn (both 69).
Grace Kim (74-70) is the leading Australian. The 2025 Evian Championship winner sits tied 11th at even par.
Robyn Choi (76-73) is the next best Australian at five over, while 2019 Women's PGA Championship winner Hannah Green made the cut on the six-over line.
Three-time major winner Minjee Lee, who opened with an 85, withdrew with illness on Friday after 13 holes.
Shin's only LPGA victory came 10 years ago at the now-defunct Volunteers of America Texas Shootout.
"I never had a five-shot lead before," Shin said. "I'm going to try and stay patient the next two days."
Shin bogeyed her opening hole but made sure that was the only bogey she'd put on her card. She bounced back at No.2 with the first of six total birdies, three on each nine.
"First hole slightly unlucky," she said. "I thought I hit a pretty good shot but it ended up in the bushes. I had to stay real patient. Hit some weird shots. Yeah, just stayed patient.
"I had 20 putts inside five feet," Shin added. "Tried to get it close when I had a wedge in my hand."
Henseleit, 27, has yet to win since joining the LPGA Tour in 2020, but she's risen to No.53 in the world rankings with two top-10s this year.
She posted a bogey-free round with consecutive birdies on her first nine (the back nine), followed by an eagle at the par-5 third.
"Didn't really get into trouble off the tee," Henseleit said. "Hit a lot of greens. Just had a lot of 25- to 30-footers, a lot of two-putts. Yeah, pretty steady day out there."
Only 10 players were under par through 36 holes.
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