He finished with a card of one-under 69 with one more day to go in the event.
Atwal, who needs to win or finish second to get back his PGA Tour card for 2013, is now 11-under and two shots behind joint leaders, Jim Furyk and Davis Love III. Atwal shot 67 and 63 in the first two rounds.
Daniel Chopra, who also made the cut, shot 66 in the third round. He had 68 and 69 on the first two days. Now at seven-under he is tied 19th up from 40th overnight.
Atwal bogeyed the fourth but quickly got back the dropped shot with a birdie on fifth. He went into red figures with a birdie on ninth but then bogeys on 10th and 14th saw him go over par.
Birdies on 15th and 16th brought Atwal under par once again but he was down to tied third after being in lead overnight.
Chopra birdied at sixth, seventh and eighth and then again the 16th and 17th. He bogeyed the 15th.
Furyk put together three solid days in the McGladrey Classic and ran off four early birdies yesterday to shoot four-under 66 and take a share of the lead with his Ryder Cup captain Davis Love III.
Love has played every week since the Ryder Cup, and the 48-year-old tournament host was at his best on a gorgeous afternoon at Sea Island.
With birdies on both the par 5s and a 15-foot birdie putt on the 18th hole, he matched Furyk with a 66 and joined him in the lead at 13-under 197.
