Lee's family came to the United States in 1976, when she was seven years old. She grew up in Elmhurst, Queens, New York, where her parents owned a wholesale jewelry store. She studied history at Yale College and law at Georgetown University Law Center. She also worked as a corporate lawyer in New York for several years before becoming a writer. Lee currently lives in Tokyo with her son Sam and her husband Christopher Duffy, who is of half-Japanese descent.
Lee's short story Axis of Happiness won the 2004 Narrative Prize from Narrative Magazine. Another short story by Lee, Motherland, was published in The Missouri Review and won The Peden Prize for Best Short Story. Her debut novel Free Food for Millionaires was published in 2007. Her next novel, tentatively entitled Pachinko, will be set in Japan.
Lee has also published non-fiction. Her essays include "Will," in Breeder - Real Life Stories from the New Generation of Mothers and "Pushing Away the Plate," in To Be Real (Ed. Rebecca Walker).
She received the NYFA (New York Foundation for the Arts) Fellowship for Fiction, the Peden Prize from The Missouri Review for Best Story and The Narrative Prize for New and Emerging Writer. Her non-fiction essays have also been anthologized in To Be Real (Doubleday, 1995) and Breeder (Seal Press 2001), and her short stories have been featured on NPR's Selected Shorts.. While at Yale, she was awarded both the Henry Wright Prize for Nonfiction and the James Ashmun Veech Prize for Fiction.