The Australian-based Englishman carded a blemish-free second-round 62 in Kitzbuhel featuring eight birdies to move one shot clear of the field on 11 under par.
Johnston, playing on a medical exemption after a succession of injury problems, arrived in Austria ranked 639th in the world and has made only 17 appearances over the past three years.
The 37-year-old opened with consecutive birdies and added two more before the turn. He then picked up another four shots across a six-hole stretch on the back nine to move into position for a second European Tour title, 10 years after his first.
Johnston, who says taking up yoga has helped revive his career, told the tour's website: "I just hit a lot of good shots. The putter got a bit hot, which I've been trying to do now for six months. You know (when) putts start dropping it's a good day."
He moved to Perth last year after having surgery in the city, and while recuperating in Western Australia with his family decided to stay.
"We've fallen in love with Perth and we just love the lifestyle," he told Australian Golf Digest last year in an interview when he talked fondly of the coffee shops and Gage Roads Brew Co.
"I quickly realised, 'Hang on, we actually were loving life here. Our little one loves it, [wife] Jodie loves it'. We wanted to finish the injury rehab here, and we ended up staying. The longer we've stayed, the more we've fallen in love with Perth. We love the lifestyle and everything."
Scotland's Calum Hill, Rafael Cabrera-Bello of Spain and Japanese player Kota Kaneko shared second place on 10 under.
First-round leader Zhou Yanhan dropped to a share of fifth place after a round of 70, hampered by three bogeys.
9°C