The 24-year-old from Taby carded a six-under 64 in the third round Saturday to vault from a tie for 12th to the top of the leaderboard at the Royal Mayfair Golf Club.
Sunday will be mark the first time Hedwall will tee it up as the final-round leader.
"It will be exciting playing in the last group," said Hedwall.
"I won on the European tour. Now I'm just waiting for my first LPGA victory."
Norway's Suzann Pettersen and Lydia Ko of New Zealand, the tournament's defending champion, are just one stroke back after a round under clear skies and little wind.
Hedwall sits at 68-68-64-200 to sit at 10 under par.
She birdied four holes on the front nine and three after the turn, along with one bogey.
At last weekend's Solheim Cup, Hedwall became the first player in Solheim history to win five matches as the Europeans dismantled the Americans 18-10.
She said Solheim is still with her.
"I was a little tired on Monday, Tuesday and Wednesday, but when the tournament started I think (the) last week just gave me a lot of energy and self-confidence," she said.
Hedwall joined the LPGA tour in 2011.
Ko, 16, bounced back from a so-so second round to notch a three-under 67 on Saturday.
"I was overall really happy," said Ko, who sits nine-under at 201.
"I was eight-under coming into the final round last year, so (now I'm) one shot better, which leaves me in a good place."
Ko was just 15 when she defeated Inbee Park by three strokes to win the 2012 CN Canadian Open at the Vancouver Golf Club.
Ko is still classified an amateur so, just like last year, if she wins the tournament she won't be allowed to accept the US$300,000 first prize. It would instead go to the second-place finisher.
Pettersen, the third-ranked player in the world, has been getting better every round. Her card is 69-67-65-201.
She shot six birdies on Saturday after making just seven total in the first two rounds.
She, too, said the recent Solheim experience is helping her game.
"From a general standpoint usually coming off Solheim — where your mindset is in such an aggressive mode — you usually feed off (it) the following week because you want to keep making putts," said Pettersen.
Pettersen, 32, has 11 LPGA wins and captured the CN Canadian Open in 2009.
The most dramatic drop of the day belonged to world Park, the world's top-ranked golfer.
Park shared the lead with Cristie Kerr of Florida heading into Saturday but saw her game collapse.
The 25-year-old South Korean logged 12 birdies over the first two rounds, but shot only one on Saturday against three bogeys and one double bogey to finish four-over 74 and six strokes back.
Kerr, the 2006 winner of the Canadian Open, bogeyed the last two holes and is tied for 20th, seven strokes back.
The two Canadians still in the field did not fare well.
Samantha Richdale of Kelowna, B.C., shot five over 75 to sit tied for 60th, 15 strokes back.
Richdale had her worst day of the tournament, logging seven bogeys after making par in each of the first two rounds.
"My ball striking has been a little bit sketchy this whole week," said Richdale.
"I'll just try and work on that on the range, and hopefully go out there and hit it a little bit better tomorrow."
Jessica Shepley of Oakville, Ont., shot an eight-over 78 and sits 19 strokes behind.
She took a triple bogey on her first hole and it was downhill from there.
"It was just a horrendous round of golf," said Shepley.
"There's not a whole lot I can do. I kind of blew this one."
The other 18 Canadians, including Lorie Kane of Charlottetown, did not make the cut.