First-round leader Aree Song shot 3-under 69 and stands alone in second place at minus-11. Suzann Pettersen and Paula Creamer share third place at 10-under-par 134. Catriona Matthew, Juli Inkster and Jean Bartholomew are two strokes further back at minus-8.
Three-time winner Annika Sorenstam was flirting with the cut line and needed four birdies over her final six holes to shoot 1-under 71. That got her into a tie for 30th at 4-under-par 140.
Sorenstam bogeyed the second and fifth to slide to minus-1. She got one stroke back with a birdie on the sixth. However, Sorenstam gave that shot back with a bogey on the ninth.
The Swede fell to even-par for the tournament with a bogey on the 12th, her second in two days at that hole. However, Sorenstam birdied on 13, 15 and 18, each for the second time in two rounds. She also birdie No. 17 to close at 4-under par.
'I finished good down the stretch today as I did Thursday,' said Sorenstam. 'I must say I played well today, I couldn't really get it going at all. I had three three-putts, but it's funny because I feel like I'm putting well.'
Lee knocked her approach shot to 8 feet at the first to open with a birdie. She stumbled to a double bogey at the third after hitting her drive out of bounds.
'I was disappointed in my tee shot because it was into the wind and when I started the first hole, the wind was blowing really hard and I tried to hit it hard,' Lee said. 'I think I was rushing my play. After the third, I tried to slow down and find my rhythm.'
The 27-year-old got one stroke back with a birdie on the fifth. Lee parred eight holes in a row from there. She moved to 8-under with a 17-foot birdie putt on the 14th.
Lee rolled in a 10-footer for birdie at 15. After a par at 16, she ran home an 18-foot birdie effort on the 17th. At the par-5 closing hole, Lee knocked her second shot to 12 feet and drained the eagle putt for the lead.
'Finally on the back nine, I had the perfect rhythm,' said Lee. 'The eagle was fun, I knew it would give me the lead.'
Song started on the back nine and tripped to a bogey on the 12th to slip to minus-7. She came right back though at 13. Song hit her third shot to the par-5 within 6 feet and sank the birdie putt.
The Thailand native missed the green on the par-3 17th, then missed a 12- foot par putt to slip back to 7 under. She parred three straight around the turn.
Song, who won the 1999 U.S. Girls' Junior amateur to become the youngest winner in event history, rolled in a 12-foot birdie putt on the third to move back to minus-8.
The 19-year-old made it two in a row with a 25-foot birdie putt on the next. However, Song missed the green on No. 5 and was unable to save par.
Song bounced right back with a birdie at the sixth. She then dropped in an 8-foot birdie effort on seven to get to 10 under. Song made it three in a row as her 30-footer for birdie found the bottom of the cup at the eighth.
'I played pretty good overall. I got off to a slow start a little bit and I just started going on the back,' Song said. 'I pretty much played similar to the way I played Thursday, just with a few more lip outs.'
Young-A Yang, Silvia Cavalleri, Carin Koch and 2004 Women's British Open winner Karen Stupples share eighth place at 7-under-par 137.
The cut fell at even-par 144 with 76 players moving on to the final two rounds. Among those missing the weekend were Se Ri Pak (145), Wendy Ward (145), Grace Park (147) and Meg Mallon (148).