Lee topped the podium with a combined score of 57.433 across the vault, balance beam, uneven bars and floor routine.
Brazil’s Rebeca Andrade won the silver with a score of 57.298 and Angelina Melnikova, representing the Russian Olympic Committee, won bronze.
Andrade’s win marks Brazil’s first-ever medal in women’s gymnastics.
Canada’s Brooklyn Moors came in 15th place. Another Canadian gymnast, Ellie Black, didn’t participate in the event after spraining her ankle on Tuesday.
Considered heir apparent to Biles, 18-year-old Lee had her moment arrive sooner than expected.
Biles, winner of every all-around competition she entered since 2013, threw the fight for the Olympic gold wide open when she decided not to defend her Rio Games all-around title having dropped out of the team event on Tuesday after one poor vault citing the need to focus on her mental health.
She watched the event from the sidelines on Thursday.
-with files from Reuters