Lee stands at 6-under-par 138 and holds a three-shot lead heading into the final round at Nine Bridges Golf Club. She was as low as minus-11 during the round, but five dropped shots on her final five holes -- including two double bogeys -- put the LPGA of Korea player over par for the day.
Reigning Women's British Open champion Jeong Jang shot a 2-over 74 in her second round and shares second place at 3-under-par 141 with Mi Hyun Kim, who carded a 1-under 71.
Hee Young Park -- who, like Lee, is one of 12 LPGA of Korea players in the field -- is alone in fourth place at minus-2 after a second-round 73. Rookie of the Year Paul Creamer (70) and Carin Koch (76) are tied for fifth place, one stroke further back.
On a day when just seven players in the field shot even-par or better, Lee began running away from her competitors with birdies at the first and fourth holes. She dropped a stroke with a bogey at the par-3 seventh, but got it right back with a birdie at the eighth and made the turn at minus-9.
Lee quickly moved to 11 under with birdies on 11 and 12, but that's as good as it got. She dropped two strokes at the 14th and bogeyed the 16th -- both par-4s -- before finishing her round with another double bogey at the par-5 last.
Along with the 11 other LPGA of Korea players, Lee earned her invitation to the event by being among the top 12 on that circuit's points list. The remaining tournament births in this 69-player field went to 50 LPGA Tour players as well as one Japan LPGA player and six sponsor exemptions.
Rachel Hetherington is alone in seventh place at even-par 144 after carding a 1-over 73 in her second round. Hee-Won Han (70) and Wendy Doolan (72) are one shot further back in a tie for eighth.
Annika Sorenstam is 12 strokes off the pace heading into the final round after carding consecutive 75s. She is tied for 30th place with seven other players at plus-6.
Defending champion Grace Park and 2003 winner Shi Hyun Ahn -- the only past champions in the field -- both shot a 73 for the second straight day. They are among a group of five players tied for 10th place at 2-over.