Lee, who represented Oakland and Alameda County in Congress, released a video on social media making the announcement.
This comes after the November recall of its mayor Sheng Thao, and two interim mayor appointments.
Oakland City Council President Nikki Fortunato Bas became interim mayor after the recall, but the city council voted to elect Kevin Jenkins as the new president, who will take over as mayor until a special election is held in April to find a permanent replacement.
MORE: Top Oakland leaders say city 'needs' Barbara Lee as mayor in new letter
The 78-year-old provided a statement in a press release giving her vision for Oakland:
"Time and time again, Oaklanders have faced our toughest obstacles by uniting to meet our challenges. At this critical moment, we must not be a city divided, but a community united. If elected I will bring my hands-on leadership, new ideas and decades of experience in identifying billions in resources for our great city, so all residents and businesses are stronger and safer and our community has optimism and confidence in Oakland's future."
"I've never shied away from a challenge. I'm always ready to fight for Oakland. Together, we can and will restore Oakland as a beacon for innovators, artists, builders, and entrepreneurs - creating opportunities that lift all families and neighborhoods."
"As Mayor I'll address our homelessness crisis, prioritize comprehensive public safety and mental health services, and lead with fiscal responsibility to deliver the core City services residents and business owners deserve. Let's do this - together. Join me in building a brighter future for One Oakland."
MORE: Kevin Jenkins selected to serve as next interim mayor of Oakland; third mayor in 3 months
Lee is not the only person considering running for mayor. Former NFL and Berkely star Marshawn Lynch said on his podcast with Gov. Gavin Newsom that has not ruled out that option. Former City Councilmember Loren Taylor is officially running for mayor again and a former Thao staffer, Renia Webb, launched her campaign last week. Republican Mindy Pechenuk has also thrown her hat in the ring.
Difficult choices will lie ahead for whomever gets the keys to the city, as Oakland faces a $130 million budget deficit.
ABC7 News insider Phil Matier said that if Lee entered the race, she'd be an immediate frontrunner, but noted the job would be full of hard decisions.