Roy Ngerng Yi Ling, a government health worker who posts comments on social issues, said 1,104 people had so far contributed more than 55,700 USD when he launched the campaign on Friday.
Ngerng published the transaction history of his bank account on his crowdfunding platform. Many of the donors registered comments criticising Lee and opposing the use of libel suits to silence government critics.
Singapore officials have long used defamation suits against printed publications to defend their reputations.
Ngerng was the first online critic brought to court by a Singaporean leader.
"Donations were mostly of small denominations, and ranged from one cent to two thousand dollars. I think it reflects the people's frustrations with the current situation," Ngerng (33), author of a blog called 'The Heart Truths' said.
The prime minister alleged that a May 15 post by Ngerng contained statements accusing him of "criminal misappropriation" of public funds.
Lee had earlier rejected an apology and dismissed as "derisory" a compensation offer from Ngerng. The court will have the final say on the amount to be awarded.
A pre-trial conference has been set for July 4.
Lee's lawyer said the post had suggested that the Prime Minister, who is the chairman of state investment agency GIC, "is guilty of criminal misappropriation of the monies paid by Singaporeans to the Central Provident Fund (CPF)."
GIC manages more than 100 billion USD of the city-state's foreign reserves. The CPF is the state pension fund.
Ngerng said today that for now, he would not "actively solicit for more funds as the target we set has been reached" but indicated he may seek help paying any damages awarded to Lee.