Oosthuizen leads by a stroke over Thongchai Jaidee of Thailand and Scott Jamieson of Scotland who are both on 11 under.
The world number six, and top-ranked player in the field, credited his his good score to his all-round game.
Video highlights: Volvo Golf Champions, Day 2
"Today I was much better with my ball-striking, I hit the ball really well and I putted beautifully," said Oosthuizen after his round.
"I seemed to have the speed on the greens so I'm able to make more longer putts than usual. It's always nice when you know the putter is working." 'King Louis' capped off a solid bogey-free round by nailing a long range birdie putt on the driveable par four 18th. Oosthuizen looked as if he would be unable to pick up a shot after finding the greenside bunker. Despite having to play away from the hole with his second, he managed to roll in the long putt for birdie.
Oosthuizen also holed a similar length putt on the par four 17th to help him to the 36 hole lead on his own.
Earlier, Oosthuizen began his round with two pars before reeling off two birdies in a row from the third hole par five, then three birdies as he made the turn in five under.
"The rain picked up when we were on the eighth and it was just a bit different, but only for a few holes then it left. I actually played really well in the rain, I made two birdies on eight and nine," said Oosthuizen.
As the rain strengthened on the back nine, Oosthuizen produced consistent golf with three pars on the trot. On the par four 13th he picked a birdie on the 310 metre par four, before ending with the grandstand finish to snatch the halfway lead.
Thongchai Jaidee of Thailand , led overnight and compiled a three under 69 in rainy conditions.
Jamieson who won the Nelson Mandela Championship in December down the road at Royal Durban Golf Club -- also affected by heavy rains -- thrived in the wet conditions with his own round of 64.
The Scot's round included nine birdies and a bogey, including three birdies in a row on the back nine.
Crowd favourite Ernie Els struggled to a level par 72 to leave himself eight strokes adrift heading into the weekend.
Full scores after second round of the Volvo Golf Champions tournament at par-72, 6 111m Durban Country Club on Friday:
132 - Louis Oosthuizen (RSA) 68-64
133 - Scott Jamieson (SCO) 69-64, Thongchai Jaidee (THA) 65-68
139 - Thomas Bjorn (DEN) 69-70, Paul Lawrie (SCO) 69-70, Shane Lowry (IRL) 70-69, Julien Quesne (FRA) 72-67, Jeev Milkha Singh (IND) 69-70, Danny Willett (ENG) 69-70
140 - Nicolas Colsaerts (BEL) 73-67, Ernie Els (RSA) 68-72, Francesco Molinari (ITA) 70-70
141 - Rafa Cabrera-Bella (ESP) 72-69, Jamie Donaldson (WAL) 69-72, Padraig Harrington (IRL) 70-71
142 - Retief Goosen (RSA) 72-70, Branden Grace (RSA) 75-67, Richie Ramsay (SCO) 69-73, Henrik Stenson (SWE) 72-70
143 - Paul Casey (ENG) 74-69, Darren Clarke (NIR) 75-68
144 - Matteo Manassero (ITA) 75-69, Robert Rock (ENG) 70-74
145 - Gonzalo Fdez-Castano (ESP) 75-70
146 - Michael Hoey (NIR) 72-74, Jose Maria Olazabal (ESP) 74-72
147 - Thorbjorn Olesen (DEN) 75-72, Bernd Wiesberger (AUT) 76-71
148 - Darren Fichardt (RSA) 78-70, Jbe Kruger (RSA) 75-73, Marcel Siem (GER) 74-74
150 - Colin Montgomerie (SCO) 72-78
152 - Ricardo Santos (POR) 76-76