Initially, the storm maintained its intensity, but soon began to weaken due to increased wind shear.

At 1000 UTC on December 22, the Joint Typhoon Warning Center (JTWC) issued a Tropical Cyclone Formation Alert (TCFA) for the system.

Two hours later, the JTWC upgraded the disturbance into Tropical Depression 29 following the discovery of a closed surface circulation by Hurricane Hunters.

By that evening, thunderstorm activity had become more concentrated towards the center;[1] as such, the Japan Meteorological Agency (JMA) first classified the system as a tropical cyclone.

[2][nb 2] Following a further increase in organization, both the JMA and JTWC upgraded the cyclone into Tropical Storm Lee early on December 23.

[4][nb 3] Meanwhile, the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) also monitored the storm and assigned it with the local name Dinang.

[4] Around this time, the JTWC predicted that Lee would turn north after entering the South China Sea due to the influence of an extratropical cyclone.

[1][2] After landfall, rapid weakening occurred, and when the storm entered the South China Sea on December 26, the JTWC reduced the winds of Lee to 70 km/h (45 mph).

[2] Based on additional reports from Hurricane Hunters, the JTWC revised its forecast and now anticipated the tropical cyclone to move on a westerly course and strike central Vietnam.

[2] Later that day, a Hurricane Hunter investigation recorded a pressure of 998 mbar (29.5 inHg) as the storm began to turn towards the north,[1] exiting PAGASA's warning zone.

[2] By midday, satellite imagery suggested that Lee was no longer a tropical cyclone; however, the JTWC continued to issue warnings on the system until 0000 UTC on December 29.

[9] Even though nine domestic flights were canceled,[11] Manila International Airport remained open throughout the passage of the typhoon.

Across Manila, some flooding was reported and high winds tore off some Christmas decorations in hotels along the bay.

[12] In the coastal region of Legaspi, home to a large volcano, 150 houses were demolished due to storm surge, 25 of which were swept out at sea.

[19] Throughout the island, the system destroyed schools, residences, an airport terminal,[20] the government house in Catarman,[16] and a jail, enabling 11 prisoners to escape.

[20] Most of damage to Samar was caused by collapsing houses and uprooted coconut trees hurled by the gusty winds.

[12] Within a few days after the passage of Typhoon Lee, relief agencies were deployed to distribute food and medicines to families temporarily housed in schools, town halls and churches.

[20] Philippine President Ferdinand E. Marcos declared an emergency and a "state of calamity" in the provinces of Northern Samar, Masbate, Mindoro Oriental, and Romblon.