Lee left the ADPL and formed the United Democrats of Hong Kong, which developed into the Democratic Party in 1994. He was elected to the Legco in the same year. He once lost his seat in the 2000 election but was re-elected in 2004. He was vice-chairman of Democratic Party from 2002 to 2004 and was elected Chairman at the sixth AGM of the DP in succession to Yeung Sum. His challenger for the Chairman's post, Chan King-ming, was elected Vice-Chairman instead.