<p>Lignin, the second most plentiful biomaterial, is a complex racemic phenolic heteropolymer of the higher plant cell wall. Given lignin’s abundance, useful properties, and inherent recalcitrance, it is crucial to explore diverse alternatives for its utilization. This is especially relevant for industries with a high capacity for application, such as those involved in food production and food-related materials. From this perspective, the manuscript presents and discusses a systematic review of lignin’s chemical composition and structure, examining the linkages for hydrolysis to facilitate lignin loosening by microbiota, green chemicals, and biochemicals. Additionally, lignin’s properties, such as toxicity and dietary fiber, alongside its active and reinforcing functions in food packaging, are evaluated to assess its practical viability as a natural food additive, ingredient, or packaging material. Lignin’s non-toxicity, waterproofing, UV-absorption, antioxidant and antimicrobial properties, and grinding conditions make it suitable for active packaging barriers in food and eco-friendly cosmetics. Additionally, lignin exhibits adsorption capacity and beneficial effects on the colon microbiota. Modifications further enhance lignin-polymer interactions and interfacial activity (emulsifier). Through this review, we uncover lignin’s untapped potential to support a sustainable economy and the development of healthy, functional processed foods—innovative applications often overlooked in lignin research and utilization.</p> Graphical Abstract <p></p>