"After nearly five years of marriage, Billy and Katie have decided to separate," a rep for the pair said in a joint statement.
"This decision is the result of much thought and consideration. Billy and Katie remain caring friends, with admiration and respect for each other," Claire Mercuri, Joel's spokeswoman said today.
Rumors have been swirling that Joel's third marriage was on the rocks.
Lee, a 27-year-old chef and author, has been romantically linked with Yigal Azrouel, a dashing 36-year-old Israeli-born fashion designer who has frequently escorted her to events, the Daily News reported.
Sources reported seeing them dirty dancing in Miami in January and have claimed that in unguarded moments Azrouel referred to Lee as "my girlfriend."
Reps for the Joels insisted that Azrouel was just a friend and that Billy, 60, was happy to skip the parties, fashion shows and fundraisers that his younger wife enjoyed.
"They grew apart. She is very career-oriented. She loves going out. She loves the city. When Billy isn't touring, he'd rather be on Long Island with his motorcycles and boats," a friend told the News.