Lee put on a back-nine show to be tied for third, just one shot off the pace, after eking out a second-round even-par 70 in more brutal conditions at the PGA Championship in chilly Pennsylvania.
At three under, the 27-year-old is spearheading a promising Australian challenge at Aronimink Golf Club outside of Philadelphia.
After starting the day in a seven-way share of the lead, Lee briefly hit four under with a birdie at the fourth hole before bogeys at five, nine and 10 threatened to cruel his chances.
But with three birdies, including two near-chip-ins and the approach shot of the day to within a foot on the tough par-4 11th, the West Australian surged back up the leaderboard.
"Not as in control as yesterday, I would say. But happy with the grind," Lee said.
"I did lose it a little bit out there just in the middle part. There's some tough holes out there. It's very easy to get your mind spiralling, but you can't do that at a major championship.
"So I made sure me and Shane, my caddie, had to regroup and thought I played the last seven, eight holes pretty good. The scores are showing that it's a very tough course."
The Perth super talent has the opportunity to burst out of his triple major-winning sister Minjee's shadow with a breakthrough maiden major of his own on Sunday.
"Yes, we are getting ahead of ourselves," Lee told reporters.
"No, it's every golfer's dream. Yeah, it would be special. You would elevate as a player and, yeah, I don't want to jinx anything but if we get to that question again, I would answer it how I feel.
"You win one, but you've got to win three more to overtake the sister. So there's still a long way to go."
Lee's turnaround comes after he missed the cut in four of his previous five major appearances, including last month's Masters.
"I've definitely matured but the game has matured as well, and that's where we want to be," he said.
"I just like the way this course shapes up for me. You have to drive it really well, and I have been driving it really well. Approach play is a lot better. The chipping and putting's not too bad too.
"Hopefully we can keep going when the circumstances become tougher and especially at a major."
Australia's men's major-winning heavyweights Jason Day and Cameron Smith are also still well in the mix.
The most recent non-American PGA Championship winner in 2015 and top Aussie at last month's Masters, Day also ground out a 70 to remain at one under for the championship, only three behind American co-leaders Maverick McNealy (67) and Alex Smalley (69).
After opening with successive birdies, Day's round also could have gotten away from him after two bogeys around the turn, but the former world No.1 steadied to close with six straight pars.
Day is tied for 16th, with Smith equal 23rd at even par.
The 2022 British Open champion posted a one-over 71 to snap his run of six consecutive missed cuts at the majors.
Elvis Smylie (72-72) made the cut on the number at four over, but Travis Smyth (74-73) at seven over and Adam Scott (72-76) at eight over, won't feature on the weekend.
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