The medical team attending to him assessed that his condition is not serious.
Lee was in the midst of delivering his English speech when the rally was stopped at around 9:20pm.
A statement subsequently said that Lee would resume his rally later.
"PM Lee says please enjoy the reception," Deputy Prime Minister Teo Chee Hean told the audience. He added that Lee will resume his speech later, to applause from the audience.
Lee was seen waving at the audience before he walked off the stage with the help of Teo, Defence Minister Ng Eng Hen and Acting Education Minister Ng Chee Meng.
Curtains were drawn and it was all silent in the ITE College Central auditorium.
In a statement on his Facebook page at 9:31pm, the Prime Minister's Office (PMO) said Lee "took ill while speaking at National Day Rally".
"The medical team is attending to him right now. They assess that his condition is not serious. PMO will update in due course," the post added.