While twice former champion Phil Mickelson made up some ground after an erratic start to the pro-am celebrity event in the California desert, Castro fired a sparkling five-under-par 67 to remain at the top.
Castro, a 27-year-old journeyman, took advantage of another near-perfect day for scoring at La Quinta, mixing seven birdies with two bogeys to finish at 14-under 130, level with fellow American James Hahn (67).
Compatriots Scott Stallings (65), Darron Stiles (65) and Richard Lee (65) were a further stroke back in a tie for third, with US Ryder Cup player Zach Johnson among a group of nine bunched at 12 under after shooting a 66.
Castro, joint leader overnight with compatriots Hahn and Jason Kokrak, played flawless golf with seven birdies in his first 15 holes to briefly lead the field by three strokes.
Though he limped home with bogeys at the seventh and ninth, where he three-putted, he was happy with his position going into the weekend in the third US PGA Tour event of the season.
"I played good," a smiling Castro said after his round on the Palmer Private course, one of three venues hosting the tournament. "I played well all day.
"Some nice up-and-downs on the par-fives for birdies, a couple (of shots) slipped away there at the end, but yesterday I made a 50-footer on the last on a good putt.
"Today I felt like I hit a good putt there and three-putted. That's stuff over 72 holes that's going to even out."
Castro, whose best US PGA Tour finish was seventh at the last year's Greenbrier Classic in his rookie season, was especially pleased with his score given the relatively tough course set-up.
"They had a lot of Sunday pins today," he said. "Palmer was playing pretty tough. There were a lot of tucked pins."
Mickelson, who struggled with his putting on the way to a roller-coaster 72 on the La Quinta layout in the opening round, was a great deal happier after shooting a seven-birdie 67 on the Nicklaus Private course.
"I feel much better," said the four-times Major winner, who had been battling flu-like symptoms coming into this week. "I was excited to get out and play.
"This was a great day to go low. I left a few shots out there, but the last couple of holes were very encouraging to me. They were the first time that my rhythm kind of set in. I expect to play a good round tomorrow and get some momentum."
- Sports & Recreation