Toronto, Canada – By Mark Lamport-Stokes
Helped by a chip-in from greenside rough to birdie the par-three 15th, the Korean posted a nine-under total of 135 in the limited field event usually hosted by world number one Woods.
Woods pulled out of the event on Monday, citing injuries from a car crash outside his Florida home last week as speculation began to escalate over his private life.
On Wednesday, he apologized for "transgressions" in a statement that apparently addressed allegations he had extra-marital relationships.
Yang covered the back nine in a flawless three-under 33, his birdie at the 15th putting him a stroke in front of Irishman Padraig Harrington and Britain's Ian Poulter before he ended the day with a two-shot cushion.
Harrington carded a 68 to join Poulter (69) and American veteran Kenny Perry (65) at seven under with former Masters champion Zach Johnson, co-leader overnight with Poulter, among three players a further stroke back after a 70.
Yang, who became Asia's first male major champion with his spectacular breakthrough at Hazeltine National, took control of the tournament despite an erratic display on the greens.
"My putter didn't really work for me," he told reporters through an interpreter. "I think I missed three or four short putts today."
He was determined to keep playing on in the tournament, however, even though his health has steadily deteriorated since Monday.
Yang said he would not contemplate pulling out if his condition worsened.
"No," he replied after a brief pause.
"If I do collapse, I will collapse on the golf course and I will withdraw on the golf course."
"I played flawlessly today," the 49-year-old said.
"I don't think I've missed a fairway in two days and my speed has been great with the putter.
"That's kind of the way I've played all year."
(Editing by Greg Stutchbury)