American Hoffman, 40, carded a three-over 75 to drop to four under overall, before Spain's Garcia, 37, shot a 69.
Belgium's Pieters hit a 68, while American Fowler shot a day's best 67.
Rory McIlroy (73) is one over as he seeks a career Grand Slam but defending champion Danny Willett missed the cut.
Englishman Willett ended one over the cut line on seven over after shooting 78 in blustery winds that made conditions tricky at the Georgia course, although most players did find scoring easier than on the opening day.
Only two players - Hoffman and compatriot William McGirt - shot under 70 on Thursday, but seven men managed the same feat  in the second round - including Garcia, Fowler and Pieters.
"I felt like I played great, I felt like I hit the ball better than the first day," said Garcia, the world number 11.
"The course is still very difficult, and I made a couple of stupid mistakes but I can be happy because of the way the course is playing," he added.
Garcia has been one of the game's leading players since bursting onto the European Tour scene as a teenager, consistently hovering in and around the world's top 10 and challenging for leading honours.
But his failure to win one of the four majors, after several near misses in 22 top-10 finishes, is a blemish on an otherwise stellar career.
Two impressive rounds at a blustery Augusta have left him well-placed to shake off the unwanted tag of being one of golf's most famous 'nearly men'.
Garcia made a flying start to his second round with birdies on the first three holes before dropping his first shot of the tournament on the fourth.
Then came total confusion after a mistake on the Masters scoring system.
Garcia scored a bogey on the par-four 10th, but it was changed on the scoring system to a triple-bogey seven - dropping him down the leaderboard.
The mistake was eventually rectified by tournament officials about an hour later, moving him back into tied second and two behind Hoffman.
Two more birdies at the 15th and 17th wiped out Hoffman's lead, although the Ryder Cup stalwart missed a six-foot birdie putt on the last to take the outright clubhouse lead.
"I've shown myself many times that I can contend and I truly feel I can not only win one major, but more than one," said Garcia.
On the scorecard mix-up, he added: "I saw it on the leaderboard on the 13th but the main thing was I knew where I stood."
Hoffman, 40, caused a shock when he shot a stunning seven-under 65 to lead on Thursday but, unsurprisingly, the Californian was unable to replicate this remarkable feat.
His round was ruined by five bogeys in six holes around the turn, although he recovered to birdie the 13th and stay in the hunt.
"Any time this place firms up, it plays its hardest just because it's hard to control your golf ball," said Hoffman, who has only previously claimed one top-25 finish at a major.
Belgium's Pieters - considered one of the rising stars on the European Tour - moved into contention with another impressive showing on his Augusta debut.
The 25-year-old began the day level and, after bogeying the first, stormed back with three birdies and an eagle on the 15th.
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Fowler, two groups behind Pieters, set the tone by holing his bunker shot for an eagle on the par-five second and adding a birdie on the next. He rolled in three more birdies to record the day's lowest round.
Two-time major winner Jordan Spieth birdied three of his last six holes to finish level par alongside two other former Masters champions, Adam Scott and Phil Mickelson.
In three appearances at the Masters, American Spieth has finished second, first, tied for second.
World number two McIlroy, 27, is aiming to become only the sixth man to win all four majors - at his third time of trying at Augusta.
McIlroy, who has three consecutive top-10 finishes in Georgia, is seeking a first Masters title following victories at the US Open and the Open Championship and two US PGA Championship titles.
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He shot a scrappy level-par 72 on Thursday and followed up with a similarly-scruffy round on Friday.
He struggled to find rhythm in a card littered with five bogeys, salvaging four birdies to keep him within touching distance.
However, McIlroy felt aggrieved to walk off the 18th with a bogey after his approach shot hit the flagstick and bounced off the green.
"The shot at the last looked like a tap-in birdie and I made five. I got two bad breaks with hitting the pin and the wind then caught me out on the putt as well," he said.
"It was another day where you had to battle, make a lot of pars and pick off the odd birdie here and there.
"I feel I can put a 31 or 32 together a couple of times over the weekend and get closer to the leaders.
"Hopefully these are the toughest conditions we have played in and hopefully I can go a lot lower over the weekend."
England's Danny Willett became the first Briton to win the Masters in 20 years when he claimed his first major 12 months ago - this time there was no cause to celebrate ending another barren run.
The Yorkshireman, 29, is the first defending champion to miss the cut since Canada's Mike Weir in 2004.
Willett began the day at one over par, but his second round got off to a shocking start when he recorded a quadruple-bogey eight on the first.
Two more bogeys arrived at the fourth and 11th holes, in addition to a solitary birdie at the 10th, leaving him perilously close to missing the projected cut of six over.
And a bogey on the 18th pushed him to seven over par.
"We've had two fabulous years and then you have a little bit of a downturn and it feels like the world is coming to an end," Willett said.
"Playing Augusta at the weekend would be nice with the good weather coming in, but we had that in our own hands and unfortunately we let that slip."
Other big names who missed the cut include reigning Open champion Henrik Stenson, plus former Masters winners Bubba Watson and Zach Johnson.
Seven other Britons - Chris Wood, Tommy Fleetwood, Russell Knox, Ian Woosnam, Tyrrell Hatton, Sandy Lyle and amateur Scott Gregory, plus Ireland's Shane Lowry - also failed to make the weekend.
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Twelve months after Bernhard Langer rolled back the years at Augusta, another veteran former champion is dreaming of a fairytale finish.
Fred Couples, who won the Masters in 1992, is three shots behind the leading group after shooting a two-under-par 70.
The 57-year-old former world number one is now ranked 1,893, but showed that experience counts for everything at Augusta.
The American carded six birdies during a round punctured by a double bogey and two bogeys, and almost holed his approach on the 18th but walked off with a tap-in birdie.
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"I feel like I can play the course well but in conditions like this I feel I have a better chance than if it was sunny and less windy," he said.
"It would be hard for me to shoot a 68 like some of the better players. In bad weather I feel I could battle.
"The only real disappointment was my second on 17 which led to a bad bogey."
Another former winner, 58-year-old Larry Mize, became the oldest player to make the cut at six over par on the 30th anniversary of his 1987 victory.
Charley Hoffman's overnight advantage was wiped out as Sergio Garcia, Rickie Fowler and Thomas Pieters pegged him back for a four-way tie at the halfway stage of the Masters at Augusta.