The Spider-Man co-creator was selected for the accolade at this year's Comic-Con International in recognition of his support for the armed forces during World War II.
Lee produced several training manuals and films to help the war effort and served as a soldier during the global conflict. The award is traditionally reserved for Army and Marine Corps who have made a contribution to field artillery or air defence communities.
Marine Colonel Trevor Kleineahlbrandt hit out at the decision to hand Lee the honour. "Frankly, I'm disgusted," he told AirForceTimes.
"I'm a big fan of Stan Lee, but this is not what the award is for. It means something to us. It's not a trinket to be given out easily. It's supposed to mean you're the real deal in the field artillery."
Retired artilleryman Colonel Ralph Brown added that giving the medal to Lee "is way outside the intended criteria of the award. It sounds like the award system has broken."
Major General David Halverson, who signed off on the award, defended the decision, stating that it "was given to a former soldier and World War II veteran whose contributions, both in the Army and beyond, are in keeping with and representative of all the high standards of achievement and selfless service associated with the Honorary Order of Saint Barbara."
Lee did not collect the award in person at Comic-Con, claiming to be unaware that he was to receive the honour.
"I didn't know there was anything special involving me - nobody told me," he said.
> Chris Evans: 'Stan Lee is an amazing human being'