Donaldson, whose victory at the Irish Open in July was his first in 255 European Tour events, birdied 10 of the first 16 holes at Lake Malaren and then saw his chip to the short 17th lip out of the hole.
After parring the 471-yard last the 37-year-old held a four-stroke lead over Swede Peter Hanson, who still had three holes remaining.
World number one Rory McIlroy was back on the course where he won the Shanghai Masters a year ago and entering the closing stretch he was four under along with Chicago hero Martin Kaymer and Italian brothers Francesco and Edoardo Molinari.
Luke Donald and Lee Westwood were one further back, while Justin Rose, McIlroy's closest challenger on the Race to Dubai Order of Merit, was two under along with Graeme McDowell, Paul Lawrie and Ian Poulter, playing for the first time since winning all his four games at Medinah.
Donaldson finished the day four clear of Ryder Cup pair Hanson and Francesco Molinari and told European Tour radio: "It was one of those rounds where you hit every shot where you want to and every putt where you want to.
"The course suits me. The fairways are quite generous and if you miss the bunkers you can play aggressive golf.
"It's an awesome field, so I need to keep playing like that to stay ahead of them."
In fast-fading light McIlroy, playing in the final group with Westwood and Rose, hit his approach to three feet on the last and birdied for a 67 that put him alongside Olazabal and Hoey in fourth place.
Rose finished strongly to be among those on four under, but Westwood played the last eight in one over to slip back to two under, the same as Donald and Poulter.
Only 22 of the 78 players finished the day over par.