In 1973, Lee emigrated to the United States and attended high school in Oak Ridge, Tennessee. He graduated summa cum laude from Columbia University, earning a B.S. degree in computer science in 1983. He went on to earn a Ph.D. in computer science from Carnegie Mellon University in 1988.
At Carnegie Mellon, Lee worked on topics in machine learning and pattern recognition. In 1986, he and Sanjoy Mahajan developed Bill, a Bayesian learning-based system for playing the board game Othello that won the US national tournament of computer players in 1989. In 1988, he completed his doctoral dissertation on Sphinx, the first large-vocabulary, speaker-independent, continuous speech recognition system.
Lee has written two books on speech recognition and more than 60 papers in computer science. His doctoral dissertation was published in 1988 as a Kluwer monograph, Automatic Speech Recognition: The Development of the Sphinx Recognition System (ISBN 0898382963). Together with Alex Waibel, another Carnegie Mellon researcher, Lee edited Readings in Speech Recognition (1990, ISBN 1-55860-124-4).
After two years as a faculty member at Carnegie Mellon, Lee joined Apple Computer in 1990 as a principal research scientist. While at Apple (1990–1996), he headed R&D groups responsible for Apple Bandai Pippin, PlainTalk, Casper (speech interface), GalaTea (text to speech system) for Mac Computers.
In 1998, Lee moved to Microsoft and went to Beijing, China where he played a key role in establishing the Microsoft Research (MSR) division there. MSR China later became known as MSR Asia, regarded as one of the best computer science research labs in the world. Lee returned to the United States in 2000 and was vice President of interactive services division at Microsoft from 2000 to 2005.
Before the case could go to trial, on December 22, 2005 Google and Microsoft announced that they had reached a settlement whose terms are confidential, ending a five-month dispute between the two companies.
On September 7, 2009 he announced details of a $115m venture capital (early-stage incubation and seed money Business model) fund called "Innovation Works" (later changed to "Sinovation Ventures") that aims to create five successful Chinese start-ups a year in internet and mobile internet businesses or in vast hosting services known as cloud computing. The Innovation Works fund has attracted several Investors, including Steve Chen, co-founder of YouTube; Foxconn, the electronics contract manufacturer; Legend Holdings, the parent of PC maker Lenovo; and WI Harper Group.
In December 2012, Innovation Works announced that it had closed a second US$275 million fund.
Lee posted on Weibo on September 5, 2013 revealing that he was diagnosed with Lymphoma.
In September 2016, the company announced its corporate name change from Innovation Works to "Sinovation Ventures," closing US$674 million (4.5 billion Chinese yuan) capital injection. Total fund size of Sinovation Ventures exceed US$1 billion.