The club also announced that a search is underway for Lee's replacement.
Lee's resignation comes after the franchise suspended him in June while awaiting a court ruling on his harassment charge.
The Ottawa native was charged with second-degree harassment in late May and was accused of making lewd comments toward and rubbing the shoulders of a 19-year-old male shuttle bus driver while attending the NHL draft combine in Buffalo.
"My hearing in Buffalo has been postponed until September 13. While my case continues to be reviewed by the courts, I do wish to address my future with the Senators," Lee wrote in a statement, via TSN's Ian Mendes. "My suspension has given me more time to spend with my loved ones than ever before. For the past 23 years, my family has taken a back seat to my career. My focus now is on putting them first.
"At the same time, I have to think about my obligations to the hockey team. They need an assistant general manager who can focus completely on the coming season. Until this matter is behind me, however, I'm not in a position to (do) that. For this reason - in consultation with the Ottawa Senators and my family - I have chosen to resign as assistant general manager of the Ottawa Senators and general manager of the Belleville Senators."
Lee's first court date was on June 4, and he pleaded not guilty to the charges. If convicted, he faces a possible fine and up to 15 days in jail.
"The (Senators) organization is doing the right thing to protect the public, its employees and other individuals who can be subjected to his actions," Charles Desmond, the attorney representing the shuttle driver, told The Associated Press.
The 56-year-old had been with the Senators since 1995, beginning as the team's video coach. In 2009, he was named director of hockey operations, and then received a promotion to assistant GM midway through the 2013-14 season.