As fellow Australian Hannah Green fell off the pace, Lee carved out a one-under-par 71 at the ever-challenging Erin Hills Golf Club to pull within four shots of Swedish leader Maja Stark.
One of only nine players to break par on Saturday (Sunday AEST), Lee was only two back before a bogey on the par-4 15th left the dual major winner and 2022 Open champion in a tie for seventh at three under heading into the final round.
A birdie from 12 feet at the par-5 first hole set a positive tone for Lee, who hit 12 of 14 fairways and 14 of 18 greens but couldn't fully convert with the long putter.
"I feel like I missed a few opportunities that I did have, but I think overall the pin placements were a little bit trickier today," Lee said."Didn't feel like it was all that windy, but it was windy for the pin placements that we had, if that makes sense."(The course) is much firmer now. The last two days it was a little damper, so I felt like the balls stopped a little bit quicker on like the first bounce."But now they're kind of rolling out to what we think it should.
"With this consistent wind all day, it's going to dry out even more. Tomorrow is meant to be nice as well."I think it'll be a true Sunday test."
Stark's third-round 70 earned her a one-stroke buffer over young Spanish sensation Julia Lopez Ramiro, a former world amateur No.1 who fired a 68 to surge to six under.
Chasing a second straight major after winning last month's Chevron Championship, Mao Saigo let a three-shot halfway lead slip with three consecutive bogeys on the fourth, fifth and sixth holes.
The Japanese sensation steadied and looked set to take a least a share of the lead into the final round until dropping two shots over the last two holes.
Saigo is tied for third with compatriots Rio Takeda (70) and Hinako Shibuno (72), with American world No.1 Nelly Korda (73) one shot further back in solo sixth.
After starting the day level with Lee at two under, Green posted a Saturday 73 to drop to one under and a share of 13th, six shots behind Stark.
Green at least birdied the last two holes to give herself a fighter's chance of reeling in the leader.
The 25-year-old Stark is seeking just her second victory on the LPGA Tour, having won the 2022 ISPS Handa World Invitational.
"Probably going to go work out in the morning to try to get some nerves out," Stark said.
"But I think just keep having fun with it because when I play scared, that's when I mess up.
"And you can't really play scared at a course like this."
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