The overnight leader's three-shot buffer was erased in just two holes on Sunday morning at Royal Queensland.
Japan's Riyuka Hoshino drew level at 16 under with two birdies while Chilean star Joaquin Niemann's ace two groups ahead on the par 3 fourth also pushed him into the reckoning.
But Lee almost landed a hole-in-one of his own on the same hole and was quickly back in front by three.
He found the trees on the ninth with his drive then stayed to the right with his second shot, before chipping from 50 metres and sending the gallery wild when it rolled in for eagle.
Lee celebrated appropriately as he moved to 21 under, four clear of Hoshino and on track to break the tournament record of 22 under set by Jed Morgan early last year.
A bogey on the 10th brought him back to 20 under though, still three clear of his Japanese playing partner with eight holes to play.
🚨 AN ACE FOR — PGA of Australia (@PGAofAustralia) @joaconiemann 🚨#AusPGA | #visitbrisbane pic.twitter.com/CJ5yKkBOrqNovember 26, 2023
Marc Leishman's good form continued as he moved to 13 under - four-under for the day - through 11 holes.
Niemann was at 12 under with Scotland's Connor Syme  while Adam Scott had dropped a shot to be 10 under and in a tie for 10th.
Lee boasts three pro titles and a tie for fifth at this year's US Open but said victory in Brisbane would top the list.
"Yeah I think so ... I've wanted to win and I have the potential to win but I've only had three so it's not like it (always) comes off," he said.
"I expected myself to play pretty well. I've been hitting the ball so well all year and the results have been there."
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