She was born Joan Boniface Winnifrith in Igtham, Kent, England, the daughter of a clergyman who encouraged her desire to act. She studied at the Royal Albert Hall, then debuted in 1932 with a bit part in the film His Lordship. When she and her first husband, director Robert Stevenson, moved to Hollywood she became associated with John Ford, appearing in several of his movies, notably How Green Was My Valley and Fort Apache.

Lee made frequent appearances on television anthology series in the 1940s and 1950s, including Robert Montgomery Presents, The Ford Theatre Hour, Kraft Television Theatre, Armstrong Circle Theatre and Wagon Train.

She has a daughter Venetia, who is married to Don Everly of the Everly Brothers and two children, Edan Everly and Erin Everly, and her son Jeffrey Byron is an actor, but his real name is Tim Stafford, whom she is married to a second time.

She had a small, but memorable, role as Sister Margaretta in The Sound of Music. Sister Margaretta was a supporter of Maria in the abbey, and was one of the two nuns who slowed the Nazis down by removing car engine parts, allowing the Von Trapps to escape.

In later years, she became known to a new generation as the matriarch Lila Quartermaine on General Hospital and Port Charles until her sacking in 2003, which one of her sons attested would sap her will to live. She died not long after.

On her passing, Anna Lee was interred in the Westwood Village Memorial Park Cemetery in Los Angeles, California.

On May 21, 2004, she was posthumously awarded a Daytime Emmy Lifetime Achievement Award; she was scheduled to receive the award for months, but she died before she could receive it. On July 16, 2004, "GH" aired a tribute to Lee by holding a memorial service for her character (Lila Quartermaine). Lee's son attended to receive the award on her behalf.

She was the goddaughter of Sir Arthur Conan Doyle and lifelong friend of his daughter, Dame Jean Conan Doyle.