In 1931, Lee Strasberg became one of the co-founders of the Group Theatre, a company which included such legends as Elia Kazan, John Garfield, Stella Adler, Sanford Meisner, Franchot Tone, and Robert Lewis. In 1936, Strasberg became a naturalized citizen of the United States. In 1949, he began a lengthy career at the Actors Studio in New York City. Within two years, he was artistic director and the now-renowned institution's reputation flourished. Actors under his tutelage there included Geraldine Page, Paul Newman, Al Pacino, Kim Stanley, Marilyn Monroe, Jane Fonda, James Dean, Dustin Hoffman, Eli Wallach, Eva Marie Saint, Robert DeNiro, Jill Clayburgh, Jack Nicholson, Ellen Burstyn and Steve McQueen.

In 1966, he established the "Actors Studio West" in Los Angeles. In 1969, he began the Lee Strasberg Theatre Institute there as well.

While rarely stepping in front of the camera himself (he appeared in just seven films), his most famous role was surely that of Hyman Roth in The Godfather: Part II. Playing an elderly Jewish organized crime figure retired to Miami and overlord of criminal enterprise in Cuba, he encounters the wrath of Michael Corleone, played by Strasberg's former student Al Pacino. For this performance, Strasberg received an Academy Award nomination.

He was married to his second wife, the actress and drama coach Paula Strasberg from 1934 until her death from cancer in 1966. They were the parents of actress Susan Strasberg and acting teacher John Strasberg. Lee Strasberg's third wife was the former Anna Mizrahi, a Sephardic Jew who was born in Venezuela and the mother of his two youngest children, David and Adam.

Strasberg is considered by many to be the patriarch of American "method" acting. He provided inspiration for generations of actors during his lifetime and a lasting legacy for generations to come.

Lee Strasberg died of a heart attack in New York City at the age of 80; his eldest children and only grandchild were disinherited in the will. Strasberg is interred at Westchester Hills Cemetery in Hastings-on-Hudson, Westchester County, New York.