The top seed was taken to three games by Finn Ville Lang in a late-night thriller at Wembley Arena, but produced a strong finish to prevail 21-8 14-21 21-11.
Lee had been troubled in the build-up to London 2012 by an ankle injury and showed signs of rustiness as world number 45 Lang fought back in the second game.
Although the Malaysian eventually came through by winning 10 of the last 11 points, his performance will offer encouragement to his rivals, particularly reigning champion Lin Dan.
Lin, the Chinese superstar and second seed, looked in superb form as he brushed aside Ireland's Scott Evans earlier in the day.
Lee, who plans to retire after the Games, said: 'I am only mentally strong because I have had an injury and I am still not 100%.
'But I had nothing to lose and I just tried my best.'
Danish veteran Peter Gade, playing his fourth and last Olympics at the age of 35, started his latest bid for gold with an easy win over Portugal's Pedro Martins.
Watched by Crown Prince Frederik, the Sydney 2000 semi-finalist and fifth seed won 21-15 21-8.
The day's highest-profile casualty was Japan's eighth seed Kenichi Tago, who crashed out after a shock loss to Sri Lanka's Niluka Karunaratne. The big guns in the women's Singles had no such trouble.
Chinese pair Wang Yihan and Wang Xin, seeds one and two respectively, both reached the last 16 with comfortable wins in a morning session.
Visitors in the afternoon were denied a potentially thrilling finish in a men's Doubles match between Thailand's Bodin Isara and Maneepong Jongjit and the Poles Adam Cwalina and Michal Logosz.
The Polish pair were trailing 17-15 in a deciding game when Logosz snapped an Achilles tendon landing awkwardly after jumping. He left the arena in a wheelchair and the Thais won by default.
The USA's 2005 world champions Howard Bach, 33, and Tony Gunawan, 37, announced their retirement after going down to a third successive loss in the men's Doubles, this time to Japan's Naoki Kawamae and Shoji Sato.
Republic of Korea's Lee Yong-dae saw his hopes of defending the Mixed Doubles title ended as he and new partner Ha Jung-eun lost 21-15 21-12 to Danes Thomas Laybourn and Kamilla Rytter Juhl.