He was the son of Dr Richard Lee, a Presbyterian clergyman who was rector of Hatfield and held many preferments under the Commonwealth. He was chaplain to George Monck, afterwards Duke of Albemarle, but after the Restoration he conformed to the Church of England, and withdrew his approval for Charles I's execution.
Nathaniel Lee was educated at Westminster School, and at Trinity College, Cambridge, taking his B.A. degree in 1668. Coming to London, perhaps under the patronage of George Villiers, 2nd Duke of Buckingham, he tried to earn his living as an actor, but acute stage fright made this impossible. His earliest play, Nero, Emperor of Rome, was acted in 1675 at Drury Lane. Two tragedies written in rhymed heroic couplets, in imitation of John Dryden, followed in 1676 Sophonisba, or Hannibal's Overthrow and Gloriana, or the Court of Augustus Caesar. Both are extravagant in design and treatment.
Lee's reputation was made in 1677 with a blank verse tragedy, The Rival Queens, or the Death of Alexander the Great. The play, which deals with the jealousy of Alexander the Great's first wife, Roxana, for his second wife, Statira, was a favourite on the English stage right up to to the days of Edmund Kean. Mithridates, King of Pontus (acted 1678), Theodosius, or the Force of Love (acted 1680), Caesar Borgia (acted 1680), an imitation of the worst blood and thunder Elizabethan tragedies: Lucius Junius Brutus, Father of His Country (acted 1681), and Constantine the Great (acted 1684) followed.
The Princess of Cleve (1681) is a gross adaptation of Madame de La Fayette's exquisite novel of that name. The Massacre of Paris (published 1690) was written about this time. Lee had given offence at court by his Lucius Junius Brutus, which had been suppressed after its third representation for some lines on Tarquin's character that were taken to be a reflection on King Charles II. He therefore joined Dryden, who had already admitted him as a collaborator in an adaptation of Oedipus, in The Duke of Guise (1683), a play which directly advocated the Tory point of view. In it part of the Massacre of Paris was incorporated. Lee was now thirty, and had already achieved a considerable reputation. He had lived in the dissipated society of John Wilmot, Earl of Rochester and his associates, and imitated their excesses. As he grew more disreputable, his patrons neglected him, and by 1684 his mind was completely unhinged. He spent five years in Bethlehem Hospital, and recovered only to die in a drunken fit in 1692, and was buried in St Clement Danes, Strand, on May 6.
Lee's Dramatic Works were published in 1784. In spite of their extravagance, they contain many passages of great beauty.