After shooting an opening-round even-par 72, the Australian double-bogeyed the ninth, her last hole on Friday, to card a 73 and drop back to one over for the tournament.
Earlier she had three bogeys to go with birdies on the sixth and 18th, and an eagle on the par-4 16th thanks to a stunning fairway iron that found the cup from distance.
Lee is in a group of 10 players tied for 11th, eight shots behind leader Bailey Tardy.
LPGA rookie Tardy has five missed cuts in 10 events this season and nearly didn't qualify to play in this week's major championship. But the American is atop the leaderboard after two rounds, as a four-under 68 left her at seven under.
"I'm honestly just enjoying the moment here," Tardy said after making the cut for the first time in her four US Women's Opens.
"I'm leading the US Open at Pebble Beach. And I think that's something that is just so special. I'm trying not to get too ahead of myself. There's so much golf left."
The 26-year-old will carry a two-shot lead over compatriot Allisen Corpuz (70) and co-leader after round one Hyo Joo Kim (71) into the weekend.
Another South Korean in Hae Ran Ryu (72) is fourth at three under, with Ireland's Leona Maguire and Japan's Nasa Hataoka tied for fifth at one under after each shooting 74s.
The top 60 players and ties made the cut at six over par or better. World No.1 Jin Young Ko was not among them. The South Korean couldn't sink a birdie putt on her final hole and missed the cut by a single shot, following Thursday's 79 with a 72.
Thailand's Atthaya Thitikul (76), Americans Jennifer Kupcho (77) and Lexi Thompson (79) were other notables to miss the cut.
Lee, the world No.5 from WA, is trying to emulate Karrie Webb in going back-to back at the Open with the Australian great the last player to achieve the feat in 2000-2001.
Lee was spearheading a five-strong Aussie charge in California that includes fellow major winner Hannah Green. Green (71) is three over at the halfway point, Gabriela Ruffels (71) five over and Grace Kim (76) six over, but amateur Maddison Hinson-Tolchard shot an 80 to finish 14 over and miss the cut.
The third major of the women's golf season is offering a record $US11 million ($A16.5m) purse, with $US2m ($A3m) to the winner.
With Reuters.
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