The Volkswagen driver began the day with a 17.7s advantage over Volkswagen team-mate Sebastien Ogier after an action-packed first leg and proceeded to beat his rival on the first two tests of day two.
Latvala extended the gap by a slender 0.3s through San Agustin before posting the quickest time on the Amboy-Yacanto stage. He enters the interval with a 21.2s advantage over the reigning champion.
Kris Meeke continues to hold on to a comfortable third place and his nearest rival is Andreas Mikkelsen, who returned under Rally 2 rules after he suffered a mechanical issue on Friday.
Rally Argentina
Ogier: Argentina defeat no big deal
12/05/2014 AT 11:25
The Norwegian went quickest of all through the first stage and emphatically beat both Robert Kubica and Elfyn Evans on the second test.
Kubica's cautious approach is paying dividends as he turned the overnight 0.2s deficit to Welshman Evans to a 16.5s advantage after 80 kilometres of running.
Hyundai's Thierry Neuville and Dani Sordo rejoined the action after their first day dramas and while the Belgian has remained competitive, his Spanish team-mate was forced to retire on the first stage having suffered yet another suspected loose turbo pipe.
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Rally Argentina
Latvala claims Rally Argentina victory
11/05/2014 AT 17:38
Rally Argentina
Latvala leads from Ogier in Argentina
09/05/2014 AT 14:57