Lee racked up two uncharacteristic double bogeys during a second-round four-over-par 76 at Shadow Creek in Nevada.
Australia’s World No.5 dropped in to a tie for 13th, with only the top eight after Saturday’s (AEDT) third round to progress to the knockout match-play phase.
Rose Zhang watched her two-stroke lead with two holes to play turn into a four-way tie for first place as strong winds played havoc with her and everyone else who teed off in the afternoon.
Zhang ended the second round with two straight bogeys, dropping her into a tie at four-under with first-round leader Sei Young Kim, Carlota Ciganda and Angel Yin.
The latter two played in the morning, when warm temperatures and moderate wind created near-perfect playing conditions. Then the expected gusts of more than 60km/h hit to provide those on the course with quite a challenge.
No one with an afternoon tee time broke par.
The projected cut went from five-over par to nine-over in about three hours, with 67 players making it through. It’s the highest cut line on the LPGA Tour since the 2020 Women’s Open.
Ciganda carried on her strong play from last week, when she tied for third in the Ford Championship in Arizona. She signed for a bogey-free 67.
This is Yin’s first tournament since breaking her leg the week after Thanksgiving while in Austria. She carded a 68, crediting ibuprofen for helping get around the hilly, 6765-yard course.
World No.1 Nelly Korda’s hopes of extending her three-tournament winning streak remain alive after she walked off with a 73 for the second day in a row, putting her at two-over and three strokes behind equal seventh.
Defending champion Pajaree Anannarukarn shot a 79 and was nine-over, just enough to keep her in the tournament.
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