Super 14 career which has seen him line up for the Wellington Hurricanes, Chiefs and Auckland Blues.
"Danny's been a proven performer at the highest level in New Zealand rugby over the past few years," said Dragons Head Coach Paul Turner." He has a good track record and is a strong all-round player.
"As a former All Black, Danny brings a tremendous pedigree and experience to the region and not only will he be a valued addition to the side, but we are confident that he will help develop our emerging scrum halves"
32 year-old Lee has played for New Zealand at every level, scoring a try in his debut for the all Blacks in 2002 against England.