The pair are one shot ahead of the Denmark's Jacob Skov Olesen (69), with South Africa's Jovan Rebula (67) in fourth on nine under-par.
Naidoo, 25, carded six birdies in his first seven holes of the round on Saturday, before a bogey on the ninth.
Birdie no.8 of the day! — DP World Tour (@DPWorldTour) @DylanNaidoo takes the outright lead once again. #AfrAsiaBankMauritiusOpen pic.twitter.com/nKPQmJ4trdDecember 21, 2024
He added two more birdies on the back nine but also dropped a shot on the par-five 18th to end on a low note.
"I had to focus and find the competitor in me. The front nine was good, the back nine a grind, but I am happy with the result overall," Naidoo said.
"I tend to like courses where good driving can set you up nicely and my iron play has been good lately. I found the putter today as well."
Naidoo's best previous finish on the European tour is tied 11th at the same event last year.
"There are still 18 holes to play, a long way to go. I am excited to be in this position, I have never been here before," he said.
Pepperell, 33, who has two previous wins on tour, both in 2018, is using the trip to Mauritius as a belated honeymoon with caddie wife Jennifer and would dearly love to celebrate a win.
Australian Daniel Gale had threatened to launch a serious challenge at the top of the leaderboard as he moved to within a couple of shots of Naidoo at one point, but a double-bogey six at the 16th and another bogey at the last eventually left him six off the lead in joint-15th place after a two-under 70.
