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On November 10, 2011, President Barack Obama nominated Lee to be a United States district judge for the Northern District of Illinois. He was nominated to the seat vacated by Judge David H. Coar, who assumed senior status on August 12, 2009. Lee received his hearing by the Senate Judiciary Committee on January 26, 2012, and his nomination was favorably reported by the committee on February 16, 2012, by a voice vote, with Senator Mike Lee recording the only no vote. On May 7, 2012, his nomination was confirmed by a voice vote. He received his commission on May 8, 2012. His service as a district judge was terminated on September 12, 2022, when he was elevated to the court of appeals.
Notable rulings
In July 2018, Lee, sitting by designation, wrote for the unanimous panel of the United States Court of Appeals for the Seventh Circuit in Doe No. 55 v. Madison Metropolitan School District when it found that the Madison Metropolitan School District was not liable for child sex abuse of a student by its security guard because the school's principal had not had actual knowledge of the abuse. This decision was affirmed en banc.
On April 13, 2022, President Joe Biden announced his intent to nominate Lee to serve as a United States circuit judge for the Seventh Circuit. On April 25, 2022, his nomination was sent to the Senate. President Biden nominated Lee to the seat to be vacated by Judge Diane Wood, who announced her intent to assume senior status upon confirmation of a successor. On May 11, 2022, a hearing on his nomination was held before the Senate Judiciary Committee. During his confirmation hearing, Republican senators criticized him over his decision to uphold J. B. Pritzker's stay-at-home order, which limited in-person church services. On June 9, 2022, his nomination was favorably reported by the committee by a 12–8–2 vote. On August 7, 2022, Majority Leader Chuck Schumer filed cloture on his nomination. On September 6, 2022, the United States Senate invoked cloture on his nomination by a 48–42 vote. On September 7, 2022, his nomination was confirmed by a 50–44 vote. He received his judicial commission on September 9, 2022. He is the first Asian American judge to ever serve on the 7th Circuit.