Mabel Lee was born in western New South Wales (NSW) and was raised in Sydney's western suburbs. She attended the University of Sydney and taught Chinese Studies there from 1966-2000 becoming Associate Professor in Chinese Studies. She later retained an honorary position in the School of European, Asian and Middle East Languages. Her particular field has been twentieth-century Chinese literature and history. As a leading authority on Paris-based writer/critic Gao Xingjian and the writing of Australasian-based poet Yang Lian, she has translated contemporary Chinese works into English. These include Gao Xingjian's novel Soul Mountain, winner of the Nobel Prize for Literature in 2000. In 2001 she was awarded also the PEN Medallion.

Lee co-founded Wild Peony Press and was a member the editorial board of Literature and Aesthetics, the journal of the Sydney Aesthetics Society. She has been co-editor of two University of Sydney series, The East Asian Series and the World Literature Series, with a desire to promote greater understanding of 'Asian' peoples in the English-speaking world. She has contributed to several books on Chinese grammar and language.