Chen took both games 21-18 to consign Lee to a third consecutive defeat in an Olympic Games final.
It was a first gold medal for world number two Chen, who won bronze at London 2012, but a third straight silver for the top-ranked Lee.
Despite being one of the sport's most accomplished players, the Malaysian has never won a world or Olympic title.
He lost the previous two Games finals to Chinese arch-rival Lin Dan.
Chen took an early 11-8 lead in what turned out to be the deciding game before stretching his hold over Lee to 20-15.
There was no way back for the quiet Malaysian and Chen celebrated by running with his shirt off to the Chinese fans at the Riocentro venue.
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