The 2012 Olympic bronze medalist positioned herself well going into the final lap of the race and reacted well to overtake Tianshi Zhong of China to take gold.
Zhong's push for the line cost her silver too as Malaysia's Fatenhah Binti Mustapha came through to finish 0.07 seconds behind Lee.
In the other final at the velodrome, China's men claimed victory in the team pursuit, beating hosts South Korea in the gold medal race, with Japan sealing bronze ahead of Kazakhstan.
There were more golds for the hosts in Incheon in the judo competition with wins in three finals while Japan also tasted success with Anzu Yamamoto and Hiroyuki Akimoto winning the women's -57kilogram and men's -73kg bouts respectively.
China and South Korea dominated Sunday's shooting finals with two gold medals apiece, the hosts taking victory in the men's team and individual 10-metre air pistol events while China replicated their success in the two trap finals.
In the pool, Japan and China shared the six gold medals on offer with Ryosuke Irie (Japan) successfully defending his men's 100m backstroke title and China's 4x100m women's freestyle team again took top place on the podium.
World records tumbled in the weightlifting competition as North Korea's Kim Ung-uk set a new benchmark in the men's 62kg and Hsu Shu Ching doing the same in the women's 53kg for Chinese Taipei.
She claimed victory ahead of Kazakhstan's Zulfiya Chinshanlo who also took a new record with her lift in the clean and jerk.
Sunday's final gold medals came in the wushu with Sun Peiyuan of China taking the men's daoshu and gunshu, while Vietnam's Duong Thuy Vi took the women's jianshu and qiangshu titles.
South Korea and China will contest the women's team final in the badminton and the final four in the men's event will see Malaysia, China, South Korea and Chinese Taipei fighting it out for the medals.
Group matches in the men's basketball, beach volleyball and hockey all continued on Sunday, with the artistic gymnastic individual competition getting underway.
Thailand and China both claimed victories in the women's cricket competition and the latter topped the standings in the team technical routine in the synchronised swimming.
The sepaktakraw competition reached the semi-final stage, wins for Myanmar and South Korea will see them battle for the men's gold and Laos will meet Myanmar in the women's.
Group matches in the football, handball and volleyball saw further matches take place, with the squash semi-finals also confirmed.
The individual dressage competition saw Hwang Young-shik and Kim Dong-seon take the top two qualifying places for South Korea, while India claimed victory over Nepal in the men's tennis second round and Chinese Taipei beat Philippines in the opening clash of the women's draw.
Seven rowing heats also took place at the Chungju Tangeum rowing centre, while the women's water polo round robin saw wins for Kazakhstan, Japan and China.