Lee invoked his 10-and-5 rights and rejected a proposed deal to Southern California, Cubs general manager Jim Hendry confirmed on Wednesday.
"When the trade was presented to me, I felt for me and my family the best thing to do was to stay here," Lee said after the Cubs' 8-1 loss to the Astros. "That was a decision we made. Jim and I had a great conversation about it. That was the decision."
Lee is building a home in Southern California but that wasn't a factor. The house, he said, isn't ready yet.
"It's not as simple as you have a home there," Lee said. "There's a lot of thought that goes into it outside of just a home."
Lee has been traded twice before but never in-season.
"I thought about it for a good 24 hours and really kind of agonized over it," the first baseman said. "I think the bottom line is family. I like Chicago, I enjoy my teammates. It was the decision we made."
Lee did not want to comment prior to Wednesday's game. Cubs manager Lou Piniella found out mid-game.
"I did talk to Derrek in the seventh inning today and asked him about it," Piniella said. "He said he wanted to stay here. As a manager, I couldn't be more pleased."
The Angels were looking for another bat after Kendry Morales was injured. Lee does have a full no-trade clause and is owed about $4.95 million for the rest of the season. But he also has been in the league for 10 years and five with the same team, which gives him the right to veto any deal.
"Derrek's a very standup guy, as you all know," Cubs infielder Ryan Theriot said. "He's somebody I've looked up to as a teammate and a person. Knowing he wants to be here says a lot about Chicago and the organization and the city. He's not alone in feeling that way. If more of us had that right to do that, more of us would."
The news came as a nice surprise to Lee's teammates.
"It just shows the kind of guy he is," pitcher Randy Wells said. "He's a great guy, great teammate and a valuable asset. Without a guy like him on your team, you never know where you're going to be, and not just on the field but in the clubhouse. He's the guy everybody looks up to and he walks in the room and everybody perks up. As far as where we're at right now, that's huge that he stays."
Lee, who will be a free agent after this season, is batting .248 with 11 home runs and 44 RBIs, well off his usual pace. In 17 games since July 6, he is hitting .333 with 17 runs, seven doubles, one homer and eight RBIs. Someone asked if Lee had considered retiring after this season.
"That hasn't crossed my mind," he said.
But what about next year? Lee said he touched on that briefly with Hendry, but the focus was more on the possible trade.
"There's no secret I enjoy Chicago," Lee said. "But also understand that's out of my control. That didn't go into my decision. There are other things that went into the thought process.
"You guys know I'm having a terrible season," he said. "We'll worry about other stuff later."
The Rangers also were looking at adding a right-handed bat who could play first, but Lee, 34, was not a good fit.
"It was very tempting," Lee said of going to the Angels. "I didn't say 'no' right away to Jim. There was a lot of thought that went into it."
Carrie Muskat is a reporter for MLB.com. This story was not subject to the approval of Major League Baseball or its clubs.