McCarthy, who led by two after a 10-under-par first-round 60, followed up with a five-under-par 65 that gave him a comfortable clubhouse lead at 15-under 125 with afternoon starters still on the TPC River Highlands course in Cromwell, Connecticut.
Eric Cole was in the clubhouse on 11-under after a five-under 65. Zac Blair (65) and Adam Scott (68) were tied at 10-under 130 while American Keegan Bradley was 10-under through nine holes.
McCarthy shook off a bogey at the second hole, where he missed the green, carding six birdies the rest of the way.
That included a 43-foot birdie putt at the 10th and another from just inside 20 feet at 18.
His 125 total was a 36-hole course record, but McCarthy was more focused on the weekend and challenging for a first PGA Tour title.
"It's nice, but golf tournaments aren't 36 holes unfortunately, so I know there is still a lot of golf left. I'm playing some really nice golf, so I'm looking forward to having fun this weekend and I'm looking forward to the challenge," he said.
McIlroy was in a group on eight-under-par 132, climbing the leaderboard with an impressive display on the greens and despite a double-bogey disaster at his penultimate hole, the par-three eighth - the same hole he aced on Thursday.
"Other than that, it was a really good round of golf," said McIlroy, whose tee shot was in the water.
"It just got hit by a little bit of wind," McIlroy added. "Hit a pretty good shot. I just misjudged the wind a little bit and it came up short - the one place you couldn't miss today on that hole."
The Northern Ireland star, coming off a runner-up finish to Wyndham Clark at the US Open at Los Angeles Country Club on Sunday, had eight birdies at that point, setting the tone with a 19-foot birdie putt at the 11th.
His five birdies in his first nine holes also included a 13-footer at the 14th and a 14-footer at 17. His three birdies coming in included a 25-footer at the third.
"Way better on the greens," McIlroy said after his lowest PGA Tour round this season. "I think when you can get out in the morning here the greens are so much better. You can be a little more aggressive with your putts, and that paid off for me this morning and holed quite a few."
While low scores abounded, world number one Scottie Scheffler couldn't join the birdie fest. He had two birdies and two bogeys in an even-par 70 that left him on seven-under 133.
Second-ranked Jon Rahm carded a one-over 71 and at two-under was one stroke outside the projected cutline of three-under-par when he walked off the course.
