A day after firing a nine-under 62, Vilips shot a three-over 74 at the Vidanta Vallarta course in Vallarta on Friday (Saturday AEDT).
The 25-year-old is six-under for the tournament, sliding from leader to tied for 34th.
Vilips is eight shy of the leader, American Andrew Novak, who shot a 10-under 61 second-round to jump to 14 under.
Vilips couldn't find his first-round form when he carded 10 birdies, with his second round marred by six bogeys including three on his initial four holes.
The only other Australian in the field, Cam Davis, produced a better second round to survive the cut, carding 67 after his initial 71, to be tied for 59th heading into the weekend.
Davis, who was even-par overnight, was treading water for much of his round until landing an eagle on his 16th hole of the day, the 584 metre par-5 sixth.
The tournament pacesetter, North Carolina-born Novak, holds a three-shot buffer from five golfers at 11 under - Frenchman Matthieu Pavon, American duo Kihei Akina and Ben Griffen, Japan's Kensei Hirata and Belgium's Adrien Dumont de Chassart.
Akina is an amateur who continued his impressive string of results on the PGA Tour - he's carded rounds of 67 and 64.
The 20-year-old sophomore at Brigham Young University in Utah now has posted nine rounds of 67 or better in his past four PGA tournaments.
"I'm feeling more comfortable with each round played," he said.
"It's my first time going from an event to another event, so back-to-back.
"It's a little bit different for me in that aspect.
"Every new tournament, every new round, is a learning experience for me. And this one here was a really great experience."
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