Sagstrom leads by one from Megan Khang on the Upper Montclair Country Club course, just outside New York City.

Nasa Hataoka, who won in Los Angeles in April before taking time off, is third after a 65.

Bianca Pagdanganan, Amy Yang and Giulia Molinaro were tied for fourth at 66, one shot ahead of a group that includes Lexi Thompson and Lee.

Two-time defending champion and top-ranked Jin Young Ko shot a 69.

Sagstrom, a runner-up last year in the AIG Women's Open, made birdies in batches, finishing with nine in a bogey-free round.

The two-time European Solheim Cup winner from Sweden birdied the first four holes and had another run at Nos.12-14.

"It was one of those days," Sagstrom said. "Like everything was easy. It's like I was hitting the fairways, hitting the greens, and I was making all the putts. The hole just kept growing."

Sagstrom recalled turning to her caddie, Sean Codd, and telling him, everything felt like a tap-in.

"It's one of those days," she said. "You just trying to hold on to momentum and just keep it going."

The round was her best of the season and one shot off her career best of 62 in winning the 2020 Gainbridge LPGA at Boca Rio.

"It was one of those days. Like everything was easy. It's like I was hitting the fairways, hitting the greens, and I was making all the putts. The hole just kept growing." - Madelene Sagstrom.

Yuka Saso had the low round on Tour this year, a 62 at the LPGA Honda in Thailand in March.

Khang, who like Sagstrom played in the afternoon, was almost as good, making eight birdies on the course laid bare because of soft, slower-than-normal greens and a lack of wind.

"Definitely stroking it really well, reading the greens well," said Khang, who tied for third at Palos Verdes in the last event.

Lee matched Khang's eight birdies, but a double-bogey six on the 10th and a bogey on the 16th set her back.

Katherine Kirk is the next best Australian at two-under in a tie for 37th, one shot better than Sarah Jane Smith.

Hataoka ignited her round with a 10-foot eagle putt on the par-5 2nd and added five birdies the rest of the way in posting her fifth-straight round in the 60s.

Ko, who finished second at Palos Verdes in the last event, had six birdies and three bogeys – caused by failing to hit the fairways.

"I want to play a bogey-free round next three days," she added. "This course is really tough, so hit the fairway and hit the greens, make a par. Birdie or par."

Anna Davis, the 16-year-old who won the recent Augusta National Women's Amateur, shot a 70 playing on a sponsor's exemption.

The field of 144 will be cut to the low 70 and ties after the second round of the 72-hole tournament Friday.