Unflappable former world former world number one Jiyai Shin has emerged from the pack to steal the outright lead after the third round of the women's Australian Open in Melbourne, as an unheralded American claimed the spotlight in the men's event.

While 954th-ranked Ryggs Johnston jumped into a share of the lead with local hope Lucas Herbert, Shin conjured some late magic to complement her extraordinary consistency to snatch an improbable two-shot advantage over in-form Australian Hannah Green on Saturday.

Chasing a second Open victory, after winning in Canberra in 2013, Shin chipped in on the 17th hole, then drained a long bomb at the last to soar to 14 under par for the championship.

The two-time British Open champion eventually signed for a dazzling six-under 67 at the rainswept Kingston Heath Golf Club and has only made two bogeys through 54 holes despite the conditions.

With an astonishing six birdies in a row mid-round, Green had seemed destined to lead into the final round before an unfortunate double-bogey stumble at the 17th.

The world number six left her second shot in the trap after her ball clipped the lip of the bunker, then missed her bogey putt attempt before Shin chipped in on the very same hole for a crazy late four-shot swing at the top.

Showing the class that has already yielded three titles on the LPGA Tour this year, Green bounced back with her eighth birdie of the day at the last to sign for a 68.

At 12 under, the 27-year-old West Australian is two behind Shin and two in front of South African two-time defending champion Ashleigh Buhai, who matched Shin's 67.

With 20-year-old Queenslander Justice Bosio six shots off the pace in fourth, the tournament looks a three-way battle for the Patricia Bridges Bowl after five players had held at least a share of the lead on a day of fluctuating fortunes.

In the men's tournament, Australian Herbert held off the pack to retain a tie for the lead with American Johnston.

Victorian fan favourite Herbert relinquished a four-shot halfway advantage with a grinding even-par 72 in miserable Melbourne.

Little-known and lowly ranked Johnston joined Herbert at 14-under with a birdie-filled 4-under round of 68 as 13 players ended the day within five shots of the lead.

Johnston blazed through the front nine in 31 shots, catching Herbert even before the turn with his fourth consecutive birdie on the seventh hole.

A dreaded double-bogey seven on the par-five 14th was the world number 954's only blemish as Johnston continued his stunning week on the Melbourne sandbelt.

Hailing from Montana and named after Mel Gibson's Lethal Weapon character, the DP World Tour Qualifying School graduate only arrived on Monday after finishing in a tie for 43rd at last week's Australian PGA Championship in Brisbane.

The 24-year-old then played this week's other host course, Victoria Golf Club, on Tuesday and had planned a practice round at Kingston Heath on Wednesday before the foul weather intervened.

Despite going into Thursday's opening round "pretty much blind", Johnston carded eight birdies — including five in a row from the 12th — and a single bogey to reach seven under par and sit one shot off the lead.

Chile's Joaquin Niemann was the best on the day, kicking off an eight-under round with an eagle on the first and birdies on the second and third.

He had five more birdies with a bogey on 10, propelling him into third spot, two shots behind Herbert and Johnston.

Australian star Cameron Smith is in a tie for 49th after a 4-over third round.

AAP