The little-known South African rolled a 6-foot putt over the right edge of the cup for a bogey at No. 1. That dropped him to 11 under and pushed Henrik Stenson within three strokes of the lead.
The hard-charging Swede moved into second when he holed out from the fairway for an eagle at the 13th. He was 6 under for the day.
Also at 8 under: England's Paul Casey, trying to end Britain's 11-year drought in its home major. He birdied two of the first three holes.
There was no charge from Tiger Woods. Going for his third straight win at the Old Course, he played the front side in a 1-over 37, slamming clubs and muttering to himself as he remained eight shots behind Oosthuizen.
Even though the wind picked up Saturday afternoon, conditions were much more favorable for the third round than a day earlier, when 14 players _ including first-round leader Rory McIlroy _ shot in the 80s.
McIlroy's roller-coaster ride continued. He played the first 16 holes at 4 under, giving him a shot at the claret jug that appeared to slip away when he followed up an opening 63 _ tied for the lowest score ever in a major _ with an 8-over 80, the worst score ever from someone shooting so low the day before.
A double-bogey at the "Road Hole" put a damper on McIlroy's comeback, though he did bounce back for a birdie at No. 18 that sent him to the clubhouse with a 4-under 212.
Phil Mickelson also showed signs of rallying, getting as low as 4 under. But he, too, ran into late trouble: a double-bogey at No. 16 after he knocked his tee shot off the road and into the hospitality area far right of the fairway, then at bogey at the 17th when his approach landed up against the stone wall behind the green.
Lefty settled for a 70 and a 214 through three rounds, likely to leave him with too large a deficit on the final day to make a serious run at his first Open title.
Mark Calcavecchia wasn't able to finish what Greg Norman and Tom Watson started.
Playing in the final group with Oosthuizen, the 50-year-old Calcavecchia got off to a rough start with bogeys at the first three holes, knocking him seven strokes behind.
Norman and Watson were in their 50s when they contended at the Open the last two years. With Calcavecchia faltering, 51-year-old Tom Lehman moved up to become the top senior golfer at 5 under.
Thirty players had to return to the Old Course to finish up the second round after high winds forced a one-hour suspension on Friday. Facing only a cool breeze, British Amateur champion Jin Jeong birdied the 18th hole to complete a remarkable 2-under 70.
Of the last 105 players to tee off in the second round, only three broke par _ Jeong, Alejandro Canizares (71) and Darren Clarke (70).
Everyone was chasing Oosthuizen, a 27-year-old regular on the European Tour who's given South Africans another reason to beam _ please, no vuvuzelas _ on the heels of successfully hosting soccer's World Cup.
This is new territory for the player who's given name is Lodewicus Theodorus. This is the first time he's ever made the cut in four British Open appearances, and only the second time in nine tries that he's played on the weekend in a major.
His lead was large but so was the pressure. And so much depends on the weather, the most bedeviling defense at the seaside course.
"It's everybody's dream to win the Open," Oosthuizen said, who was 12-under 132 at the midway point after two straight rounds in the 60s. "But to win at St. Andrews ... you never really think it will happen."
Then again, the British Open has a history of producing unlikely champions _ Ben Curtis (2003) and Todd Hamilton (2004). Maybe this is Oosthuizen's week. In March, he won for the first time on the European Tour.
"Everybody around here is telling me, 'You've got the shots, you're playing well,'" Oosthuizen said. "That win earlier this season just got my mind set in a different way. I'm reading it really nice and looking forward to it from here on."