In 1920 he married Nellie Pace, and they had a daughter, Helen. After two years of marriage his wife became seriously ill with pneumonia, then with Hodgkin's disease, which took her life in 1926. In 1928 Lee married Margaret Draper from Wellington, Utah, and they became parents of three children, a daughter, Jon, and sons James and Richard.

In addition to managing his insurance business, Lee became a registered Republican, a 32nd-degree Mason, an Elk, and a Legionnaire. By 1931 he had become so involved in Price politics that he ran for mayor; however, he was swamped. He ran again in 1935, winning by two votes. He was elected to five additional two-year terms for a total of twelve years in office.

Lee unsuccessfully sought the governorship of Utah in 1940 and 1944; in 1948, however, he was elected, defeating Governor Herbert B. Maw. From his earliest days in politics, Lee was charismatic, independent, supremely self-confident, and candid. He became arguably the most colorful and controversial politician in Utah history, and had perhaps a greater impact on the state and nation than any Utah figure since Brigham Young.