Lee was born in Shanghai, China. His early studies at the National Chekiang University in Guizhou province, southern China, were interrupted by the Japanese invasion during World War II. He fled to Kunming, Yunnan, where from 1945 to 1946 he studied at the National Southwest Associated University. In 1946 he received a Chinese government scholarship, which enabled him to study at the University of Chicago in America. In 1950 he gained his PhD there for his astrophysics work on the composition of certain types of stars. In the years 1950–51 he worked as a research associate in astronomy at the Yerkes Astronomical Observatory, Wisconsin, and taught physics at the University of California at Berkeley. The next two years he spent at the Princeton Institute of Advanced Study, leaving to take up an assistant professorship in physics at Columbia University. He was made full professor in 1956.

While at Berkeley and Princeton, Lee worked with a fellow countryman he had known briefly in Kunming – Chen Ning Yang. These two maintained contact while Lee was at Columbia, working on problems of elementary particle physics. In a great insight, the two men challenged one of the fundamental concepts of that time – the conservation of parity. Put simply, it had been assumed that the laws of nature are unchanged in mirror-image transformations. Lee and Yang realized that this assumption had never been explicitly tested, and that it might not be valid in the case of the so-called ‘weak’ interactions between particles. They published a controversial paper in 1956, and within months experiments had been performed (by another Chinese, Chien Shiung Wu) which showed that the ‘law’ of parity is indeed violated in such interactions. In 1957, only a year later, Lee and Yang were jointly honored with the Nobel Prize for physics.

Lee went on to consider some of the implications of this discovery, particularly as it affected ideas about the neutrino. He has also made contributions in the fields of statistical mechanics, nuclear physics, field theory, and turbulence. With the exception of a three-year break (1960–63) at the Princeton Institute of Advanced Study, he has continued his work at the physics department of the University of Columbia.