The Netherlands, the world's number one side, showed their dominance early on but couldn't capitalise on six penalty corners in the first 15 minutes and a stubborn England defence kept the game goalless at the break.
England were rewarded in the 40th minute when they took the lead after Kitty van Male deflected Sally Walton's innocuous ball into the danger area past Joyce Sombroek in the Dutch goal.
Just 12 minutes later the scores were level when Eva do Goede produced one of the goals of the tournament, smashing an unstoppable reverse stick strike into the roof of the net from the top of the circle.
Ending in a draw, the game went to penalties and after Alex Danson had scored in sudden death, Roos Drost lost control of the ball allowing Maddie Hinch to clear the ball, sparking jubilant scenes.
And Lee is confident his girls can produce one more giant performance in Saturday's final against Germany to seal their first major title since 1991.
"I think the girls played brilliantly. I know we've had an up and down tournament, but I felt confident that they had some really strong performances in them and I think we showed that," said Lee.
"I've experienced something with these girls since I've been in charge, which I've been in awe of, they have a fantastic level of ability and the work ethic they have as a team is brilliant.
"Coming into this game I felt really excited to be with this group in a semi-final against Holland because I know we could do something special. I also think we're in a great place to go and take the title now as well."