Google, fighting to gain ground on China's Baidu's
Lee, who joined the firm from Microsoft
Google China's engineering responsibilities will fall to Yeo Boon-Lock, the firm said in a statement. John Liu will take over Lee's business and operational responsibilities.
Lee's departure set for the middle of September, comes at a time when Google is inching forward in its battle with Baidu in the world's largest Internet market by users, while fighting Beijing regulators who want Google to censor its searches.
According to Analysys International, Baidu held 61.6 percent of China's search market in the second quarter while Google held 29 percent.
Some analysts expect Google to continue chipping away at Baidu's lead, as the Mountain View, California firm launches new initiatives, such as free music downloads, to entice the Chinese surfer.
Kai-Fu has made an enormous contribution to Google over the last four years, helping dramatically to improve the quality and range of services that we offer in China, said Alan Eustace, Google's senior vice president for engineering, in a statement.
Under Lee's stewardship, Google China had a difficult relationship with Beijing censors. In June, a Chinese official accused Google of spreading obscene content over the Internet. The comments came a day after Google.com, Gmail and other Google online services became inaccessible to many users in China.
Beijing's criticism of Google came as the government stepped up a campaign against Internet pornography, requiring all PC makers pre-install special Green Dam software to filter out objectionable material such as online pornography.
China has since backed down on that plan though it will still be rolled out in schools and Internet cafes.
Lee's entry to Google was mired by a lawsuit from Microsoft, who sued Google and Lee, claiming that Lee was violating his non-compete agreement by working for Google within one year of leaving Microsoft.
The lawsuit was settled out of court before the case could go to trial.
(Editing by Jacqueline Wong and Valerie Lee)