When it started to look like war between America nd England was inevitable, he volunteered his services to America. He expected to be named Commander-in-Chief of the Continental Army -- he was the most experienced candidate. On the other hand, he was English, somewhat eccentric, slovenly in appearance, coarse in language, and perhaps most damming of all, he wanted to be paid (he expected to lose all of his property in England, and expected to be compensated for this). Washington, on the other hand, was sober, steady, calm, and best of all, would work without pay, asking only that Congress should cover his expenses. Washington also was a good political choice; a southern commander to pair with a primarily New England fighting force. Washington won, and Lee was given the lesser rank of Major General. Lee is often considered second in command of the American forces, although Artemas Ward officially held this position (Ward was not in good health).
Lee got some other titles too; in 1776, he was named Commander of the Canadian Department, although he never got to serve in this capacity, instead, he was appointed as the first ever Commander of the Southern Department. He served in this post for six months, until he was recalled to the main army. This same year, he was caught by the British at White's Tavern in Basking Ridge, New Jersey -- three miles from camp, where he stayed in comparative luxury. He was eventually regained by the American forces in exchange for General Prescott.
Lee is, unfortunately, most famous for messing up during the Battle of Monmouth. Washington ordered him to attack the retreating enemy, but instead he retreated himself. He retreated directly into Washington and his troops, who were advancing, and Washington chewed him out in front of everybody. Lee responded with 'inappropriate language', and was arrested, and shortly thereafter court-martialed. Lee was found guilty and relieved of command for a period of one year.
It's not clear that Lee made a bad strategic decision; he believed himself outnumbered (he was -- British commander Sir Henry Clinton has 10,000 troops to Lee's 5,440), and retreat may have been reasonable. But he disobeyed orders (he never did think Washington was much of a general), and he expressed disrespect to his commander. These days he is not usually seen as a hero, or as particularly brave.
Lee tried to get Congress to overturn the court-martial verdict, and when this failed he resorted to open attacks on Washington's character. Lee's popularity plummeted. Colonel Laurens, an aid to Washington, challenged him to a duel, in which Lee was wounded in the side. He was released from him from duty on January 10, 1780. He retired to Philadelphia, PA, where he died on October 2, 1782.
He was a dog lover, and was rarely seen apart from his dogs. His favorite, a Pomeranian named Spada, is mentioned about as often as his wife is (that is, not much). He also had a fort named after him, Fort Lee on the New Jersey side of the Hudson river, right across from Fort Washington.