It was published on one of the blog's unverified Twitter accounts, which then tweeted that the reporting was correct but had been accidentally published from a drafts folder.
While Lee is verified on Twitter, Hollywood Unlocked does not appear to have its own verified Twitter account.
Variety has contacted the outlet's reps for further comment.
Not long after the apology was tweeted, Lee said he "woke up to some fake account posting a retraction. We do not know that account and we have not retracted our story. There has yet to be an official statement from the Palace. Staying tuned."
A Buckingham Palace representative would not comment to Variety and is unlikely to issue a statement on the report.
The "exclusive" story remains on the Hollywood Unlocked website and posts about the Queen's death are still available on the outlet's Instagram page.
Shortly after the story was published, Lee stated, "We don't post lies and I always stand by my sources. Waiting for an official statement from the palace."
He also wrote on Instagram that he has "never lied", "never been wrong", trusts his sources, and that he's "yet to see an official statement from the palace saying otherwise".
Founded by Lee, the website appears to cover a range of news from entertainment to celebrity gossip.