Lee slammed home a left-foot volley in the 109th when he was left completely unmarked 10 meters (yards) from Australia's goal. Lee had all the time in the world to perfectly time his volley from a cross by defender Yuto Nagatoma and fire it past Australia goalkeeper Mark Schwarzer.
Lee then ran to the center circle and fired a symbolic arrow into the night sky over the Khalifa stadium as a row of small fireworks exploded across the structure arch to celebrate the goal.
Australia was in its first final since switching from Oceania to Asia in 2006 and also lost to Japan in the quarterfinals on penalties four years ago. It will now have the chance to go for the title when it hosts the tournament in 2015.
Qatar has won the bid to stage the 2022 World Cup and the Asian Cup was the tiny but wealthy Gulf nation's first rehearsal for the showcase tournament of world soccer.
FIFA President Sepp Blatter attended the final and sat on one side of Asian Football Confederation President Mohamed bin Hammam, a Qatari who may challenge Blatter for the presidency of the world football body. UEFA President Michael Platini sat on the other side of Bin Hammam.
After mostly meager crowds during the three-week, 32-game tournament, the Khalifa stadium was nearly full at 37,174 spectators.
But in a first glitch to what had been a generally smooth organization, there were reports of many ticket holders being locked out of the stadium, among them foreign fans.
There was no immediate comment from the organizers but the frustrated and angry fans outside the stadium suspected that people without tickets were allowed in to fill the seats and avoid a potential embarrassment of empty rows.
Both teams had their chances in regulation time but the Socceroos could have clinched it in the first extra period.
Harry Kewell pushed the ball to substitute Brett Emerton in the 102nd, but he drove his left-footed shot wide to waste the best chance any team had in extra time until Robbie Kruse's header was dug out by Japan goalkeeper Eiji Kawashima in the 104th.
Matt McKay had another effort sail high late in the first period of extra time.
The defeat meant no major international trophy for Kewell and Tim Cahill, Australia's best known stars, who were both substituted and saw Japan's triumph from the bench.
Japan, which needed extra time and penalties to beat South Korea in the semifinal, allowed Australia more chances in the first half, but Italian coach Alberto Zaccheroni's team had better opportunities when it started applying more pressure midway through the second half.
Nagatomo crossed for Shinji Okazaki to barely miss the target with a header in the 67th.
But Australia could have scored too when Kewell raced through to be one-on-one with Kawashima, who saved the striker's shot with his leg.
Japan defender Maya Yoshida cleared off the line to prevent Australia from taking the lead. Luke Wilkshire sent a floating cross into the area in the 49th, Kawashima misjudged the flight of the ball and it bounced off the far post before rebounding off Cahill, but Yoshida saved the day.
The Australians raised their hands believing the ball had crossed the line but replays showed it didn't.
Mark Schwarzer; Lucas Neill, David Carney, Sasa Ognenovski, Luke Wilkshire, Harry Kewell (Robbie Kruse, 103), Brett Holman (Brett Emerton, 65), Carl Valeri, Matt McKay, Mile Jedinak, Tim Cahill (Neil Kilkenny, 109).
Eiji Kawashima; Yasuyuki Konno, Yuto Nagatomo, Atsuto Uchida (Masahiko Inoha, 120), Maya Yoshida, Yasuhito Endo, Jungo Fujimoto (Daiki Iwamasa, 56), Makoto Hasebe, Kaisuke Honda, Shinki Okazaki, Ryoichi Maeda (Tadanari Lee, 98).
