Lee was born in Korea in 1965. He emigrated to the United States with his family when he was 3 years old. He was raised in Westchester, New York but attended Phillips Exeter Academy in Exeter, New Hampshire. He graduated from Yale University with a degree in English and from the University of Oregon with a MFA in writing. He worked as a Wall Street financial analyst for a year before turning to writing full time.

His first novel, Native Speaker (1995), won the PEN/Hemingway Award and the National Book Award and explores the life of a Korean-American outsider who is involved in espionage. In 1999, he published his second novel, A Gesture Life, which elaborated on his themes of identity and assimilation through the narrative of an elderly physician who remembers treating Korean comfort women during World War II. His 2004 novel Aloft features Lee's first protagonist who is not Asian-American, but a disengaged and isolated suburbanite forced to deal with his world. He teaches writing at Princeton University, and currently serves as the director of Princeton's Program in Creative Writing.