The Englishman had missed his last two cuts and has gone back to some old drills and also switched to a claw putting grip as he looks to kickstart his campaign on the 2020 Race to Dubai.
Lighter winds made for better scoring in round two in the desert and Pepperell took advantage to move to eight under, a shot clear of defending champion Bryson DeChambeau, South African Dean Burmester and Swede Robert Karlsson.
Frenchman Romain Langasque and China's Wu Ashun were at six under, a shot clear of South Africa's Christiaan Bezuidenhout, German Sebastian Heisele, American Kurt Kitayama and another Frenchman in Victor Perez.
Pepperell's countryman Lee Westwood has also switched to the claw grip and he put on an excellent putting display in his victory last week in Abu Dhabi, prompting Pepperell to try the technique himself.
A discussion with Tommy Fleetwood and his caddie Ian Finnis has also helped Pepperell with the short stick, and he is happy to be looking and feeling more natural on the golf course with both his swing and his putting stroke.
"I've played with swing feels for a few years and I have a couple of drills that have given me some quite strong ones and that's where I've had a lot of success," he said.
"It might look very technical with me but believe it or not in my mind it doesn't feel that way, at least certainly when I'm doing pretty good, because it's all about feeling.
"I think regardless of what your hands are doing on the grip, great putters tend to look quite comfortable. When I set this way I look more comfortable which, in my mind and I think in the viewer's mind, should be more confident.
"It's been very good the past two days and I've been surprised with how good it's been. If I can keep doing that over the weekend with what I've been doing with the swing I think I'm going to make plenty of birdies which would be great."
Pepperell went on a birdie run around the turn after picking up shots on the tenth and 13th and bogeying the 15th.
He made gains on the 16th, 17th, first and second to lead by two, with Burmester - who was involved in a car accident on Wednesday - the man leading the charge to catch him after birdies on the 12th, 13th, 16th and 18th.
Pepperell made his second bogey of the day on the sixth and when Burmester got up and down from the sand on the second, the duo were tied at the top.
Burmester also bogeyed the sixth to leave Pepperell in solo possession of the lead, and a big finish from Karlsson left him just one back.
The Ryder Cup Vice Captain birdied the third, fifth and tenth and, after giving a shot back on the 15th, finished with two gains to get to seven under.
In the afternoon, DeChambeau put an approach to six feet on the first, got up and down from the rough on the driveable second and took advantage of the par five third for a fast start.
He dropped a shot on the sixth but birdied the par five tenth and 13th and put an approach to ten feet on the 14th to sit just one back.
A missed green at the par three 15th led to a bogey but he drove right up to the side of the putting surface on the par four 17th to get back to seven under.
"It was a great start to the day, I thought I could maybe birdie them all but that was too high of a goal, obviously," he said. "It was fun to be able to play well and get in the clubhouse right next to the lead.
"My wedge game has been immaculate, my putting has been for the most part a success, and iron play has kept me in the proper place. I hit a couple of nice drives today and I'm getting better with my driving."
Langasque and Wu both fired rounds of 69, a score matched by Heisele, while Bezuidenhout and Perez signed for rounds of 66 and Kitayama carded a 70.
Fleetwood was in the group four shots off the lead and the 2017 Race to Dubai Champion went ten shots better than round one in a 65 that was the lowest round of the week so far.