The unmarked substitute sent a stunning left-foot volley past the diving Mark Schwarzer in the 109th minute to hand his country their fourth title at the continental showcase, a feat no-one else has achieved. The win, following their successes in 1992, 2000 and 2004, carried the added bonus of an automatic place at the 2013 FIFA Confederations Cup in Brazil - the traditional FIFA World Cup™ warm-up tournament.
It followed a deadlocked match at 90 minutes that sent the game into extra time, with penalties looking likely until Lee worked his magic. Both teams had scored 13 times before the final and Australia looked most likely to add to that early on.
Harry Kewell had the first shot on target in the opening minute, an ambitious long-range drive that did not trouble Eiji Kawashima, while Matt McKay sliced a decent opportunity from inside the box just seconds later.
Schwarzer, who marked a significant milestone by surpassing Alex Tobin to set a new record for the most capped Socceroo ever on his 88th appearance, also found himself in action at the other end. The 38-year-old, though, had Keisuke Honda's half-chance easily covered.
Australia were looking strong with Japan missing the spark of Shinji Kagawa, who broke a bone in his foot in their penalty shootout win over Korea Republic in the last four. The Australians should have gone ahead on 15 minutes when Brett Holman whipped a low cross into the area but the stretching Carl Valeri could not connect.
In a dangerous period for Japan, Tim Cahill's header forced a desperate one-handed save from Kawashima moments later as the Socceroos upped the ante. Lucas Neill, Cahill and Kewell then linked well on the half-hour mark, only for the former Liverpool man's half-volley to hit the side-netting.
Holger Osieck's side had only conceded one goal ahead of the final and Japan were struggling to penetrate their defence until Ryoichi Maeda finally found himself in space on the edge of the area, only to hook his shot over the bar. Japan were working hard to build attacks, but they were breaking down too easily.
As they did in the first half, Australia came out after the break with real verve and almost took the lead on 49 minutes when Luke Wilkshire's cross hit the bar and Cahill tried to bundle in the rebound. Australia claimed a goal but it was not given and replays showed the ball did not go over the line.
Japan also had their chances, with Yuto Nagamoto turning Wilkshire inside-out and delivering a perfect cross to Shinji Okazaki, whose header skimmed just past the post with Schwarzer stranded.
It was anyone's game, and Kewell will have kicked himself for not doing better on 71 minutes when he had just the goalkeeper to beat, but Kawashima stuck out his right boot to save a certain goal. He was Japan's saviour again as the clocked ticked down when he rushed out to collect a loose ball ahead of the charging Kewell, as the match headed into extra time.
Tiredness was creeping in and Kewell went off to be replaced by Robbie Kruse, who almost made a dream start with Kawashima tipping his header onto the bar with the young striker's first touch of the game. Honda went close at the other end before the dangerous Nagamoto weaved down the left and found the unmarked Lee at the back post, the 25-year-old cleanly hitting his volley for his first international goal.
After the match, a jubilant Lee said he always knew he would one day be the hero. "I feel super. I could not play for such a long time and I had to keep on waiting, believing that there would be a chance for me," said the Sanfrecce Hiroshima player. "I could score a goal in the end and I'm really happy."
Asked what it felt like sitting on the bench, he said he stayed positive and waited for his opportunity. "I kept talking to myself, saying 'I'll be a hero. I'll be a hero' before I went onto the pitch," he said. "I'm really happy that I was able to stand on this pitch. I really want to thank everyone. We'll have to work hard as the Asian champions and I want you, the fans, all to support the Japanese national team."
"It is a great victory. We have a really great team. They were united and won the title against such strong opponents," said Japan's Italian coach Alberto Zaccheroni. "I knew he [Lee] would do it. What is great about this team is that players, who started on the bench, could produce results on the pitch."
Australia's German coach Holger Osieck was proud of his players, despite the agonising defeat. "You can imagine how disappointed we are to come second because we had our opportunities. Unfortunately, we couldn't convert them," he said. "But I'm very proud of the players, their performance and their attitude over the tournament, I'm full of credit. I feel very sorry for the boys that they didn't get the reward for their efforts."