For a third successive day, Larsen broke 70 at Vasatorps Golf Club and a third round five under 68 lifted her to 14-under-par 205.
Simon vaulted to second with a roaring eight-under-par 65 in the second round.
The Wanna Be A Champion golfer collected three birdies as heavy rain fell in Mörarp. A bogey at 18 saw Simon sign for a two under 71.
“I hit it well again, but didn’t hole as many putts,” Simon said after finishing at 209, two strokes clear of third-placed Malene Jorgensen from Denmark.
“That’s kind of what happens after you’ve had nine birdies in a round. I’m still happy with the way I played. I didn’t hit it too good the last three holes, but I’m only four behind.
“Nicole played great so it was good to feed off each other.
“She’s had three really good rounds and she’s playing really consistent. We don’t know what the weather’s going to do, but I’m going to need a good low one to try and beat her.”
South African rookie Melissa Eaton also card a 71 to climb to a tie for 28th at one under 218, while compatriot Laurette Maritz returned a 79 to slip to 57th on 224.
Larsen won twice on the Access Series – the feeder Tour for the LET – in 2013 and joined the LET last year.
“I played very well today and make few mistakes and when I did I fought back,” Larsen said.
“I could only putt on three of the par fives, so it was nice to hit it long and reach the par fives. It’s really nice that I kept it going and I’m in the lead so tomorrow is going to be exciting. I don’t know what I have to shoot but I’ll make a number and go for it.”
The highlight of her round was an eagle at the par-five 16th, where she hit driver, three-wood to three metres from the flag.
She dropped her only shot of the day at the closing hole when she failed to save par from the right greenside bunker.