Lee, who directed the first film, will be replaced by 'The Matrix' and 'Kill Bill' fight choreographer Yuen Wo Ping, reported Ace Showbiz.
The screenplay is based on Iron Knight, Silver Vase - the final book in Wang Du Lu's Crane-Iron Pentalogy - on which the first 'Crouching Tiger, Hidden Dragon' movie was based.
It looks like Yeoh will be the only main returning cast as her sidekick, Chow Yun-Fat, in the 2000 flick will not be back.