In 1790 Esek Sheldon and his sons Stephen, Reuben and Amasa came from Adams, Massachusetts to be the first settlers in what was to become Lee. They came up the Mohawk River from Fort Stanwix to settle in the village of Delta. There were no settlements between them and the Fort. 

In 1811, a legislative act was passed authorizing the separation of Lee from the Town of Western. James Young Jr. and Joshua Northrup formed the committee accomplishing this and requested the new town be called Lee after their home town of Lee, Massachusetts. ​

The northern part of the town is hilly, rising sharply north of Stokes and Lee Center along the Fonda Patent northern boundary. Spring-fed streams have cut into this section of the Tug Hill foothills providing dependable waterpower. West Creek provided waterpower for the Lee settlement on the State Road, now Route 69, and Canada Creek in the center of town is well supplied by small streams. The southeast portion of the town is quite level and has the best farmland in Lee. 

William Seymour Laney, with his wife Rachel, built a house in 1805 at Brookfield Corners ( now West Lee ) and it was used in pre-Civil War days as a station for slaves traveling the underground railroad.

Laney's son, William Seymour Laney Jr . was born in Lee in 1808. He attended Whitestown Seminary and later served as an officer in the Army until 1837. In 1832, the same year he was commissioned an officer in the Army, Laney purchased land in Lee now used as the Rome Kiwanis Club Health Camp for children. He was discharged in 1837 as a captain and he retired to his property. 

After his Army service he built a post and plank, cape-cod style house on this property. The residence soon became known as one of the local stations of the underground railroad. Mr. Laney was a member of the Taberg Presbyterian church, which stood in the upper Village of Taberg. In 1845, a division came in the church over the question of slavery. Many of the residents, including Laney, were strong abolitionists and left the membership. 

It was during this period that the underground railroad was in operation. A complex system of stations provided a secret means of passing the runaway slaves from the Southland to the Northland and to freedom. The slaves, who traveled by night, were hidden at the various stations during the daylight hours. Other stations in the area, similar to the one operated by Laney, were located in Rome and Taberg. Laney was a member of the Freedmen's Aid Society, an organization formed to help the freed slaves. 

Laney is buried in Lee Valley cemetery.