Lee is currently the Assistant Manager at Crystal Palace, following on from Assistant Head Coach at Southampton.
Following a distinguished playing career where he made over 190 appearances for Liverpool, Lee's first coaching role was a coach at Liverpool. In 2001 he combined this role with a similar one for England. After leaving Liverpool in 2004 Lee became Assistant Manager at Bolton Wanderers, before taking over the reigns from Sam Allardyce.
In May 2008 Lee returned to Liverpool to become Assistant Manager to Rafael Benitez. He took caretaker charge when Benitez fell ill and was unable to attend a match.
In 2012 Lee returned to Bolton as Head of Academy coaching.