Once he arrived in the Great Basin, Lee, as a member of the Council of Fifty, was kept busy. Other Mormon leaders valued his industry and loyalty. In 1850 he was called to help open the Iron Mission. He took two of his wives and left the Salt Lake Valley in late December 1850. The journey was made in deep snow to what is now Parowan, Iron County. Lee returned to Salt Lake in July 1851 to move his family south to the place he planned to call his home, a place called Harmony.

In January 1856 Lee was appointed U.S. government Indian Agent in the Iron County environs. His job was to distribute tools, seed, and supplies, and to assist the Indians with farming methods. Because of this assignment, Lee became the central figure in the tragic Mountain Meadows Massacre which occurred in September 1857.

After a group of 120 to 150 California-bound men, women, and children, known as the Fancher Party, was attacked by Indians in a four-day siege while they were camped at Mountain Meadows, Lee and William Bateman met with members of the wagon train and arranged for them to be escorted to safety under a flag of truce by the Mormon militia. With no other alternative, the company surrendered their weapons, but as they marched away from their wagons, Mormon militiamen, including Lee, shot and killed the male members of the party while Indians killed the women and older children. Seventeen small children were spared and cared for by Mormon families until they were returned to relatives in Arkansas.