Minjee Lee is heading back in the right direction after carding a second-round three-under-par 69 at the LPGA Tour's TOTO Japan Classic.

Lee remains seven shots behind Japanese pacesetter Momoko Ueda at the halfway point after climbing from 46th to a share of 26th spot at three under on Friday.

A four-birdie burst in seven holes mid-round briefly vaulted Australia's US Open champion into the top 10, where Lee needs to finish on Sunday to move back above Lydia Ko in the player-of-the-year points race.

Ko is sitting out this week's event at the scenic Seta course, the third-last of the 2022 season, opening the door for Lee and Thailand's new world No.1 Atthaya Thitikul to pounce.

Thitikul did her cause no harm with a second-round 67 to charge into a tie for eighth at six under.

Lee and Thitikul are also locked in a $US1 million duel for the AON Risk Reward Challenge, won last year by fellow Australian major winner Hannah Green.

During every LPGA event of the year, players take their best two scores from each Aon Risk Reward Challenge hole.

The player with the best average score to par at the end of the regular season is declared the winner.

Lee started this week at -0.912, narrowly ahead of Thitikul (-0.891).

The 435-metre par-5 13th - which both Lee and Thitikul birdied on Friday - is serving as this week's money hole.

If Lee can fashion an eagle at No.13 over the weekend, her average score will move to -0.944, all but ensuring she becomes the 2022 challenge champion.

Catching Ueda, though, and at least breaking in to the top 10 will likely be Lee's priority.

Ueda, the 2007 and 2011 winner, followed up her opening 65 with a 69 to surge to 10 under.

She has a one-shot lead over Miyu Yamashita (68) and defending champion Ai Suzuki (70).

Steph Kyriacou, Australia's only other player in the field, is one under in a tie for 38th after posting a second-round 71.