Montgomerie, looking for his fifth win of the year, shot 65 and was at 18-under-par 198.
Harrington, who shot a 6-under-par 66, needs a top-two finish at the final qualifying event to jump past several golfers and make the team that will be announced Sunday.
"Tomorrow is going to be the most important day of my career," said Harrington, who began the day tied for the lead with the Scotsman.
Two years ago, Harrington also led the BMW at the halfway point with a chance to make the Ryder Cup team.
But the Irishman missed qualifying by two strokes after closing with rounds of 68 and 71.
"My main focus is to win the tournament, but that's going to be difficult, since I'm giving Montgomerie a one-stroke lead at the start," Harrington said.
Last week Harrington was second at the West of Ireland Classic.
"My respects for him. There was a lot of pressure on him," Montgomerie said. "Now it all rests in his hands."
Harrington could be in, but England's Nick Faldo will not make the team that will play the United States at Brookline, Mass., ending his record streak of 11 straight appearances dating to 1977.
European captain Mark James told Faldo, one of the most accomplished golfers in Ryder Cup history, that he wouldn't be one of his two wild-card choices.
The three-time Masters champion has fallen into a deep career slump over the past two years.
"I bumped into Mark in the hotel last night and asked him he said I was too far down the ladder," said a dejected Faldo, who had openly campaigned to make the team.
There are still 10 golfers who have a chance to qualify for the Ryder Cup team, including James, who is 11-under.
Van de Velde struggled to a 1-over 73 and is just 2-under for the tournament at 214.
Karlsson shot his third straight round of 70 and is 5-under.
Harrington is five strokes ahead of four players tied for third place heading into the final round of the $1.25 million event.
©1999 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed