Tied for the lead with Hataoka after a birdie on the par-5 15th, the top-ranked Ko bogeyed the par-4 16th and made a quadruple-bogey 8 on the 17th after failing twice to get the ball out of the deep barranca.
Hataoka birdied the 16th and parred the final two holes for a 4-under 67 and 11-under 202 total at breezy Wilshire Country Club. The 23-year-old from Japan has five LPGA Tour victories, winning twice last season.
“During yesterday’s round something clicked inside me and I was able to bring that to today’s round, too,” Hataoka said. “I think that really helped me today.”
Hannah Green of Australia was second after a 69.
Ko shot a 72, closing with a 15-foot birdie putt from the fringe on the par-3 18th, to fall into a tie for third with fellow South Korean players Inbee Park (68) and Haeji Kang (69).
On the 17th, Ko hit her second shot into the barranca that snakes through the historic layout. Instead of taking an unplayable lie, she climbed down into the gully and tried to hit out twice before taking an unplayable lie.
“I played not bad. Just 17 was big mistake,” Ko said. “But this is golf. I don’t have regret.”
On the 16th, Ko’s chip from in front of the green rolled back to her feet and she made a 20-footer to salvage bogey.
“This course is tough one, so I’m trying to focus on my game,” Ko said. “And I have one more round to go, so I will use the all energy from my body.”
Ko won in Singapore early last month for her 13th LPGA Tour title. She won five times last year.
Hatoaka had five birdies and a bogey Saturday in diminished wind.
“Compared to yesterday, today wasn’t really bad,” Hataoka said. “Feel like the wind yesterday was a lot more difficult to read.”
Green had three birdies and a bogey playing in the final group with Hataoka and Ko.
“I feel like I haven’t played my entire best,” Green said. “I’m hoping tomorrow I can kind of get everything to go my way and try and put as much pressure on Nasa as possible.”
Park had four birdies and a bogey.
“This golf course, anything can happen,” Park said. “Especially, if you have a bad-putting day, it’s just a disaster on this golf course.”
The tournament is part of a two-week run in the Los Angeles area, with the Palos Verdes Championship next week.