A day after struggling with the slick pace of the greens at the elite 18-man event which he hosts, the American world number one delivered a superb all-round display on the way to an 11-under total of 133.
In pursuit of his sixth victory this year, Woods birdied four of the five-par-fives on a chilly, mainly overcast, day in the foothills of the Santa Monica Mountains to match the course record he set in the second round of the 2007 edition.
Zach Johnson, the first-round leader, birdied the final hole for a 68 to secure outright second place at nine under, finishing a stroke in front of fellow American Matt Kuchar (68).
"It was good today," Woods said after hitting 12 of 13 fairways off the tee, reaching every green in regulation and piling up 10 birdies. "I certainly hit it good, obviously.
"But I left myself in some good spots most of the day. I had probably only two putts that were downhill, most of them were uphill.
"And when I did have those downhillers and they were breaking a little bit, they were inside 10 feet, so it wasn't too bad."
Asked whether this was his best round of the year, Woods replied: "This is similar to what I did at Firestone.
"Firestone is obviously a much more difficult golf course than Sherwood, but as far as quality of ball-striking, I hit it equally as good today if not even better.
"I think I made more putts there that particular round (at Firestone). Today I played the par-fives in four under par, and that really helps."
Woods fired a stunning nine-under 61 at Firestone Country Club on the way to a commanding seven-shot victory at the WGC-Bridgestone Invitational in August, his fifth US Tour win of the year.
"The key to this golf course is you have to miss the ball in the correct spots (to leave uphill rather than downhill putts)," said Woods, who has won his World Challenge event a record five times. "I was in good spots most of the time.
"I think the next couple of days will be certainly a test for all of us with rain (forecast for Saturday) and wind on this golf course because it can come from any different direction."
Defending champion Graeme McDowell, who also triumphed here in 2010, carded a five-birdie 67 to end the second round alone in fourth, six shots off the pace.
Fellow Northern Irishman Rory McIlroy endured a roller-coaster round just five days after winning his first title of the year at the Australian Open, running up a quadruple bogey nine at the 16th on the way to a 77.