Despite the senior day loss, the Terps are still in prime position to make the NCAA tournament.
The Terps racked up 11 hits and generated 11 walks.
Right-hander Elliot Zoellner pitched 3 1/3 scoreless innings of relief, but the Terps faltered late.
Weather forced Thursday's game to continue on Friday morning.
Right-hander Hunter Parsons allowed just one run in 7 1/3 innings.
Lee started 4-for-27, but is now hitting a team-best .301.
The Terps swept the Hawkeyes to ensure their season continues.
The Terps can clinch a spot in the Big Ten tournament with a win Saturday.
The Terps allowed four runs in the ninth, but AJ Lee's walk-off home run ended it.
The Terps will need to find success against Iowa and get help from around the conference.