Garcia made the turn at Carnoustie in 2-over 38, putting him at 7 under for the tournament.
As he walked to the 10th tee, Padraig Harrington holed a 3-foot birdie on the 11th to tie him for the lead, and so many others were in contention for the silver claret jug.
Andres Romero of Argentina also was tied for the lead until hitting into the gorse bush right of the 12th green and taking double bogey, dropping two shots behind. Ernie Els was bogey-free through 11 holes and at 6 under par.
Steve Stricker had a golden chance to take control when Garcia faltered, but the American known for his pure putting stroke flinched too often, missing inside 4 feet on three occasions to fall two shots behind at 5 under.
The best round belonged to Richard Green, a lefty from Australia, who flirted with a 63 that would have tied the major championship record. But he hit into the rough on the 18th, laid up short of Barry Burn and missed a 12-foot par putt to settle for 64, matching the British Open record at Carnoustie that Stricker set the day before.
Garcia felt this tournament was his to win, especially starting the final round with a three-shot lead. He stretched the lead to four shots with a tap-in birdie on the third, but his streak of 29 holes without a bogey ended with a tee shot on the fifth.
It stopped on the edge of a pot bunker, and Garcia would have had to stand in the bunker to hit the shot. He played sideways, safely, back to the fairway. Stricker, however, found a greenside bunker with a wedge in hand and matched bogeys.
Both showed their nerves on the sixth, missing birdie putts of about 4 feet. v Garcia's emotions began to show on the seventh hole when he sailed over the green, hit a pedestrian chip to 18 feet and missed the par putt. On the next hole, Garcia missed the green to the right and failed to save par with a 6-foot putt.
Heading to the back nine, the British Open was wide open.
Tiger Woods was about the only player not in the mix. Trying to win the British Open for the third straight time, it took him two shots to get out of a rain-soaked bunker on No. 11, and he was only 1 under for his round Ã¢â‚¬" five shots behind Ã¢â‚¬" as he finished his round.