Lee finished on six-under 278, collecting $1 million, the first seven-figure prize in women's golf.
It marks the 10th time a South Korean has won the championship in just over 20 years. Pak Se-ri, the nation's first winner, started the run in 1998 and inspired a whole generation to follow in her footsteps.
Lee, who started the day two strokes off the lead, was on the nearby practice putting green when her victory was confirmed, and was soon doused in champagne by 2011 champion Ryu So-yeon.
The 23-year-old burst into tears at the victory presentation when asked what the achievement meant.
"I couldn't imagine coming this far, winning my first LPGA tournament and also major championship," she said via an interpreter.
She goes by the name Lee6 to differentiate herself from five previous Korean professionals with the exact same name.
Lee, who came into the event ranked 17th in the world, played the steadiest of the contenders until the enormity of the occasion took its toll on the final three holes.
But the three-shot lead she had built proved enough.
"I felt pretty nervous starting holes 16, 17, 18," she said. "I know I made two bogeys but I didn't want to think about it too much."
Ryu (70) and Americans Lexi Thompson (73) and Angel Yin (68) tied for second on four-under but none seriously threatened.
Instead, Lee's main danger down the stretch was joint overnight leader Celine Boutier of France who lipped out on a four-foot birdie at the 16th that would have tied it up.
Boutier's day finished miserably with a costly double-bogey at the last. She shot 75 and slipped into a tie for fifth on three-under.
(Reporting by Andrew Both in Cary, North Carolina, editing by Ed Osmond / Ian Ransom)
