Lee's closing birdie completed a six-under-par 65 at the Palos Verdes Estates course overlooking the Pacific Ocean.
The 30-year-old from Seoul reeled off six birdies in a bogey-free round to launch her latest quest for a first LPGA Tour title since victory at the Scottish Open in 2017.
It was an impressive performance from Lee, who only secured her spot in the field after coming through qualifying on Monday.
Meghan Khang of the United States and South Korea's Kim Hyo-Joo are a shot off the lead on five under after posting 66s.
Kim had looked poised to challenge for the lead after moving to six under through 11 holes.
However a bogey on the 13th dropped her back to five under and she was unable to pick up any more shots down the stretch.
Japan's Nasa Hataoka is tied for fourth with Lucy Li and Maude-Aimee Leblanc on four under.
Five players are tied for seventh on three under including the Korda sisters, Nelly and Jessica, and England's Charley Hull.
