The Olympian's hopes of defending his Australian PGA title last week in Brisbane were rocked when he suffered the injury rolling over in bed and was left unable to bend down to read his putts.
The West Australian almost missed the cut but rallied with a five-under 66 on Sunday to finish at seven under for the tournament.
Last year Lee went close to pulling off the golden Australian golf double, finishing third in the Open which was his best ever placing.
But this year the 26-year-old says his preparation has been hampered by the knee issue.
Lee only managed nine holes of the pro-am, taking a cautious approach to his recovery before his opening round at Kingston Heath on Thursday.
Min Woo Lee speaks to the media ahead of the Australian Open in Melbourne. (Con Chronis/AAP PHOTOS)
"I didn't want to aggravate it even more, but it's hanging in there," he said.
"I played nine holes and felt pretty good for most of it but I didn't want to take the gamble and play another nine holes.
"It's a day by day thing, last week I couldn't bend down and I didn't want to.
"I think it is just scary, I haven't been part of many injuries so I'm kind of new to it ... I just want to make sure I'm good for the tournament."
The injury is the second in bizarre circumstances for the world No.49 with Lee playing this year's Masters with a broken finger after he dropped a dumbbell on it on the gym.
"I think we called it sub-luxed, so it's nothing too crazy," he said of the knee.
"I literally rolled in bed and it could have happened anytime, anywhere to anyone and it's just happened to me ... literally weird."
Lee will tee off at 12.05pm in a group with defending champion, Chile's Joaquin Niemann and Englishman Jordan Smith.
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