Lee, who has served as Sam Allardyce's assistant at the Reebok Stadium since June 2005, will take charge of the team, who face West Ham and Aston Villa in their remaining two Barclays Premiership games this season.
"I'm very proud and I mentioned at the weekend I've been fortunate to work under some very good people," he said.
"The education I've gained from working with Sam Allardyce has been immense. I have to continue what Sam has started, that's first and foremost, and then re-evaluate it after that. It certainly is a healthy position that Bolton are in, we're now contesting for a place in Europe."
Trotters chairman Phil Gartside said this morning: "Today is about Sammy Lee being appointed manager. I respect Sam's views of why he has left.
"You couldn't look back on the last eight years without a lot of enjoyment and pride. We've taken Bolton Wanderers to a level we've never been at before.
"Now I'm looking forward to a different era. It is not a complete surprise. When Sam had a great chance of getting the England job a year ago we talked about what we could do then."