Six others were only one adrift after 36 holes, with seven more, including top-ranked defending champion Scottie Scheffler, just two strokes off the lead entering the weekend.
McNealy, never in the top 25 after 36 holes in 14 prior major starts, fired a three-under par 67 to match Smalley on four-under 136 at the midway mark.
"This is unfamiliar territory to me," McNealy said. "I was surprised to be that high on the leaderboard."
McNealy, a back-nine starter whose best major finish was 18th at last month's Masters, holed out a 54-foot bunker shot for eagle at the par-five 16th, then made birdie putts from 12 and 18 feet on the first two holes.
The world number 33 squandered the solo lead, however, with three-putt bogeys at the sixth and par-three eighth holes.
"My putter is going to have to be my best club," McNealy said. "That's the reason I still have a job out here."
Smalley fell out of the solo lead with three bogeys in a row, but a closing birdie put him on 69.
"It was difficult, it was chilly this morning, the wind was up," Smalley said. "Some of the hole locations are very difficult. They're right on the top of a crown."
The Field
Sharing third on 137 were Japan's Hideki Matsuyama, the 2021 Masters champion, plus Americans Chris Gotterup and Max Greyserman, South African Aldrich Potgieter, Australian Min Woo Lee, and German Stephan Jaeger, who made 18 pars.
A bogey-bogey finish doomed 21-year-old Potgieter's bid to become the youngest 36-hole major leader since Tiger Woods at the 1997 Masters.
"Looking at those last two holes as kind of unfortunate, but I felt like I was in control most of the round," Potgieter said.
Gotterup closed with three birdies to shoot 65.
"Just really battled all day," Gotterup said. "It was very hard out there. It was cold. There were some pins that didn't even look like they were on the green."
Joining Scheffler in ninth on 138 were fellow Americans Cameron Young, Justin Thomas, and Harris English, plus Spain's David Puig, Sweden's Ludvig Aberg, and South Korean Kim Si-woo.
Scheffler tumbled from a share of the lead with three bogeys in his first four holes but closed with a birdie at nine to shoot 71.
The four-time major winner missed seven fairways after hitting 13 of 14 on Thursday, but complained most about hole positions.
"Most of the pins today were, I mean, kind of absurd," Scheffler said. "You've just got to try to continue to hit good shots."
No one was able to pull away from the pack over the sloped greens at the 7,394-yard layout, but the 21-year-old from Pretoria moved to the top with steady play.
Potgieter's five-foot birdie putt at the third hole and three-footer to birdie the par-five ninth lifted him into the lead at five-under.
He could become the youngest 36-hole leader at a major since Tiger Woods at the 1997 Masters.
Japan's Hideki Matsuyama, who fired 67, and American Chris Gotterup, who closed with three birdies to shoot 65, finished on 137.
"Just really battled all day," said Gotterup. "It was very hard out there. It was cold. There were some pins that didn't even look like they were on the green."
Matsuyama, the 2021 Masters champion, birdied from 23 feet at 13 and 20 feet at seven.
"I played well," said Matsuyama. "This morning was windy. Plus, it was freezing cold, and that made it very difficult."
Top-ranked defending champion Scottie Scheffler, third-ranked Cameron Young, and fellow American Justin Thomas, a two-time major winner, were in on 138.
Scheffler tumbled from a share of the lead with three bogeys in his first four holes but closed with a birdie at nine to shoot 71.
The four-time major winner missed his first six fairways and seven of 14 overall after hitting 13 of 14 on Thursday.
"It was just really tough," said Scheffler. "It was blowing really hard, and it was quite cold as well. So the golf ball wasn't really traveling anywhere. It was just a really challenging morning overall."
Others were less fortunate.
Germany's Martin Kaymer, a two-time major winner and 18-hole co-leader, made bogeys on five of the first seven holes and shot 75 to stand on 142 with England's fourth-ranked Matt Fitzpatrick.
Ireland's Shane Lowry fired a 76 and looked to miss the cut on 144.
American Patrick Reed, the 2018 Masters winner, shot 72 to stand on 140.
Rose survives, McIlroy rebounds
England's Justin Rose chipped in for eagle from 76 feet on his final hole, the par-five ninth, to shoot 73 and looked set to make the cut on the number on 143 despite a day with two double bogeys and four bogeys.
Six-time major winner Rory McIlroy, the reigning Masters champion, fired a bogey-free three-under par 67 to stand on 141 with Jordan Spieth, Brooks Koepka, and Xander Schauffele among others.
"Some of these hole locations have been brutal," McIlroy said. "It's a really bunched leaderboard because guys are finding it tough to make putts."
McIlroy spent hours on the driving range after a 74 on Thursday and seemed to solve his woes.
"I just needed to try and find the feeling with the driver. I felt like I found a feel last night and I definitely drove it much better today," McIlroy said.
"It was a day just to get back in the tournament and that's what I felt I was able to do."
Germany's Martin Kaymer made bogeys on five of the first seven holes and shot 75 to stand on 142.