Western Australia's Dartnall, a former number one world amateur, shot the round of the day, a course record 7-under 65, to join overnight leader Holman at the top.
And while his score looked impressive, Dartnall said there is still plenty of room for improvement over the weekend.
"I saved myself a lot of times and putted really well, which is a good change to how I've been playing lately," said the 29 year old.
"I hit a lot of good shots but dropped a couple of big putts to save pars to keep it going."
Having finished top 10 at the season ending Australian PGA Championship presented by Coca-Cola, Dartnall says he feels he is re-gaining his best form and still has ambition to head back to the US.
"I struggled a bit on the Nationwide Tour in 2011 and learned a few things. But I still want to get back to the States or Europe."
"I'm trying to incorporate a few new swing things into my game, so this week is really about getting back into it and getting competitive again."
Whilst he didn't have his finest day out on course, Amateur co-leader Nathan Holman says he's happy to still be at the top.
"Obviously I didn't have my best game today but I'm pretty happy to be able to shoot 1-under without playing my best, and now hopefully I'll get ready for tomorrow and have a good day," said Holman.
Dartnall and Holman lead by one from Scott Laycock (68) and Brendan Smith, whose round was nearly one for the record books.
Smith's second day around Forest Resort Creswick included an eagle, eight birdies, three bogeys and two double bogeys on the way to a 3-under 69.
"I don't think I've ever had a round like that before," laughed Smith.
"The ones I hit bad were bad, but the ones I hit well I hit real close and they were virtual tap ins. So it was a real up and down day but I'm in a good position which is nice."
Rohan Blizard (68) sits alone in 5th position at 5-under par, while David McKenzie (69), Andre Stolz (71), John Wade (68) and Michael Foster (70) are tied at 4-under.
In other news of the day, Alex Benjamin made a hole-in-one on the 148m 13th which unfortunately wasn't enough to keep him inside the cut line of 3-over par.
Defending champion Gareth Paddison made one of the biggest charges of the day, the New Zealander shooting a 6-under 66 to make amends for his 77 yesterday.
The third round of the Turner Plumbing Victorian PGA Championship will commence from 7am tomorrow, Saturday morning, with 51 players competing on the weekend.
The final group of Dartnall and Holman will tee off at 10.55am.