Just a month after finishing in 20th position at Vancouver 2010, Lee skated to a 17th placing in her short program, then followed up with a personal best score of 86.42 in her free program for 17th overall.
The Sydney 16-year-old's score of 137.78 points was just 0.38 below the personal best of 138.16 she had recorded in the Olympic competition.
"This result opens the door to the Grand Prix events for Cheltzie," said Olympic Winter Institute Figure Skating Coordinator Belinda Noonan.
"Her pb in the free program was great stuff. She's making small improvements all along the way."
Japanese skater Mao Asada won the ladies title with a consistent performance, finishing in second place in both the short and free programs for 197.58 points overall.
The Olympic silver medallist held off a challenge from Vancouver 2010 champion Yu-na Kim of Korea, who had been well back in seventh place after the short program, but rallied to take first place in the free program, collecting a total of 190.79 points for the silver medal.
Finnish skater Laura Lepisto took the bronze on 178.62 points.
Earlier in the championships, AIS duo Danielle O'Brien and Greg Merriman finished in 25th place in the ice dancing, while Mark Webster was 39th in the men's competition.