There are a few key points.

While Lee was indicted for treason by Judge John Curtis Underwood, the case ran into several obstacles. The first is that the Sixth Amendment, as understood from the treason trial of Aaron Burr, held that treason had to be tried where in the court district where was committed; in this case, Richmond Virginia. After four years of war, Lee's stature so great that there could be no certainty that a conviction would be reached by a jury of Richmonders. The consequences of such of failure would be immense; if Lee could not have been convicted of treason, having been the deadliest enemy the US ever faced leading the main Confederate army, who could?

These concerns were exacerbated by Lee's defense. Among a jury of Richmonders, his claim that the Constitution possessed an exonerating vagueness as to the relationship between citizenship in one's home state and the United States could be used to sow a reasonable doubt. Citizenship is not really defined in the Constitution, referring to both citizens of states and of the United States. Believing that states reserved their sovereignty, in the Union, and could resume their powers when they wished, he believed that Virginia's secession had ended his U.S. citizenship, and that rather than a traitor, he had simply been fighting in one nation's army against the United States, no longer owing it his allegiance. Lee conceded that since 1861, the question of states and citizenship had been settled by the 'arbitrament of arms', but that didn't make them traitors.

Furthermore, Chief Justice Salmon P. Chase on the Supreme court had a low opinion of Judge Underwood, and opposed the treason proceedings. As long as military tribunals, the legitimacy of which had been struck down in Ex Parte Milligan, were active in the former Confederacy, Chase would cross his arms and refuse to act in his secondary role as a federal district judge; without Chase's cooperation, whatever verdict Underwood's jury reached would carry much less weight.

U.S. Grant, the greatest American hero after the death of Lincoln, also opposed the treason trial. The terms of surrender at Appomattox included parole until exchanged for all soldiers as long as they obeyed the laws where they resided. As far as Grant was concerned, this included immunity from prosecution for treason, reasoning that this was understood by both parties, and that Lee would not have accepted the terms of surrender if it did not include immunity to prosecution for treason. When Secretary of War Stanton and President Johnson were not immediately convinced, Grant threatened to resign rather than have Johnson besmirch his honor by breaking faith.

Lee's indictment got shunted to the back burner; there was still wrangling over a potential treason trial for Jefferson Davis, Confederate President, which was also obstructed by Justice Chase's obstinacy about military tribunals. As President Johnson himself was being impeached, Davis's trial was repeatedly postponed, and after escaping impeachment, Johnson decided to put a stick in the Radical Republicans' eyes by issuing a full pardon and amnesty to former Confederates on Christmas Day, 1868.