Born in Lochgelly, in Fife, to James Lee, a miner (who later gave up work in the mines to run a hotel), and Euphemia Grieg, she inherited her father's socialist inclinations, and like him joined the Independent Labour Party (ILP). Her grandfather Michael Lee (born in 1850 to Irish Catholic parents, and a friend of Keir Hardie) had founded the Fifeshire ILP federation. She later joined the Labour Party, and served as an MP from 1929 to 1931 and from 1945 to 1970.

A plaque in Buccleuch Place, near University of Edinburgh which reads:'In honour of Baroness Jennie Lee, 1904–1988, An early woman MP, first Minister for the Arts, founder of the Open University, graduate of the University'

Lee was adopted as the ILP candidate for the North Lanarkshire constituency, which she won at a 1929 by-election and at the subsequent 1929 general election, becoming the youngest member of the House of Commons. Immediately she was in conflict with the Labour Party's leadership in the commons. She insisted on being sponsored by Robert Smillie and her old friend James Maxton to be introduced to the Commons, rather than by the leadership's preferred choice of sponsors.

Lee's first speech was an attack on the budget proposals of Winston Churchill (accusing him "of 'cant, corruption, and incompetence', her gestures more fitting to the storming of platforms than the measured tones expected from a young MP in the house") that met even with his approval, with him offering his congratulations after their exchange in the Commons. Lee forged a parliamentary reputation as a left-winger, allying herself to Maxton and the other ILP members. She was totally opposed to Ramsay MacDonald's decision to form a coalition National Government, and in the 1931 general election lost her seat in parliament to Unionist candidate william Anstruther-Gray.

In her private life at the time she had formed a close relationship with fellow Labour MP Edward Frank Wise, a married man who considered divorcing his wife for Lee, but who did not do so in the end. Wise died in 1933 and the following year Lee married the left-wing Welsh Labour MP Aneurin Bevan, with whom she remained until his death in 1960. Her biography suggests that she to some extent suppressed her own career after marriage and that 'Jennie's suppression of her own career was the more remarkable precisely because as a woman in politics she had always laid claim to a 'male' life, public, itinerent and unencumbered by family responsibilities.' . She had no history in the women’s movement and did not align herself with the separate women’s branches within the Labour Party, believing that equality for women would follow from the introduction of true socialism; it was not a separate cause. Nonetheless she practised feminism 'of a sort' and was known to walk out of dinner parties if it was expected that women were to withdraw to another room when the port was circulated.

She was married to the Welsh Labour Politician Aneurin Bevan from 1934 until his death in 1960.

Despite being out of the Commons Lee remained active politically, trying to secure British support for the Spanish Popular Front government under threat from Francisco Franco in the Spanish Civil War. She also remained active inside the ILP and took their side in their split from the Labour Party, a decision that did not meet with her husband's approval. She attempted re-election in North Lanarkshire at the 1935 general election, coming second behind Anstruther-Gray but ahead of the Labour Party's candidate. She was similarly unsuccessful in seeking re-election as an "Independent Labour" candidate in a 1943 by-election at Bristol Central, being defeated by the Conservative Lady Apsley and opposed by the ILP. She also worked as a Journalist for the Daily Mirror

She later returned to the Labour Party from the ILP, and at the 1945 general election she was once again elected to the Commons, this time to represent the Cannock constituency in Staffordshire. She remained a convinced left-winger, and this brought her sometimes into opposition with even her own husband, with whom she usually agreed politically. Lee was critical of Bevan for his support of the UK acquiring a nuclear deterrent, something she did not support.

She wrote two books: This Great Journey, 1963 ; and My Life with Nye, London, 1980 ;

She was appointed as the first Minister for the Arts in Harold Wilson's government of 1964 and played a key role in the formation of the Open University, an act described by Wilson as the greatest of his time in government.

The Open University was based on the idea of a 'University of the Air' . It was intended as a correspondence university reaching out to those who had been denied the opportunity to study. Lee produced a White Paper in 1966 outlining university plans, which would deliver courses by correspondence and broadcasting as teaching media. Prime minister Harold Wilson was an enthusiastic supporter because he envisioned The Open University as a major marker in the Labour Party's commitment to modernising British society. He believed that it would help build a more competitive economy while also promoting greater equality of opportunity and social mobility. The planned utilisation of television and radio to broadcast its courses was also supposed to link The Open University to the technological revolution underway, which Wilson saw as a major ally of his modernisation schemes. However, from the start Lee encountered widespread scepticism and even opposition from within and without the Labour Party, including senior officials in the DES; her departmental boss, Anthony Crosland; the Treasury; Ministerial colleagues, such as Richard Crossman; and commercial broadcasters. The Open University was realized due to Lee's unflagging determination and tenacity in 1965–67, the steadfast support from Wilson, and the fact that the anticipated costs, as reported to Lee and Wilson by Arnold Goodman, seemed very modest. By the time the actual, much higher costs became apparent, it was too late to scrap the fledgling open university.

Lee renewed the charter of the Arts Council of Great Britain in 1967 which saw an expansion of its work in the regions as well of the creation of the new arts institutions at London's South Bank Centre. She also introduced the only UK White Paper for the Arts and following the 1967 reshuffle was promoted to Minister of State at the Department of Education and Science after two years as Parliamentary Under-Secretary of State. Between 1964 and 1965 Lee had been Parliamentary Secretary at the Ministry of Public Building and Works.

Lee was defeated at the 1970 election in Cannock by the Conservative candidate Patrick Cormack. She retired from front-line politics when she was made Baroness Lee of Asheridge, of the City of Westminster on 5 November 1970.

In 1973 as she laid the foundation stone for the first OU library, she described the university as :'a great independent university which does not insult any man or any women whatever their background by offering them the second best, nothing but the best is good enough.'

She died in 1988 from natural causes at the age of 84 and bequeathed her personal papers to the Open University which now holds them as the Jennie Lee Collection.

A community resource centre in Wednesfield, which formed part of Lee's Cannock constituency, was named the "Jennie Lee Centre" in her honour. It opened in a former secondary school in 1989, the year after Lee's death, and closed in 2013.

In 2005, the Students' Association of the newly created Adam Smith College in Kirkcaldy, Fife refused to name themselves after Adam Smith, and instead chose the name "Jennie Lee Students' Association". The Association claimed Adam Smith is synonymous with "exploitation and greed" and stated "Jennie Lee would be an excellent role model for the students because of the courage and conviction she showed in achieving the aims she believed passionately in".

In her native Lochgelly, the community library was renamed the Jennie Lee Library in her honour following the 2009–2012 redevelopment of the Lochgelly Centre.