Increasing demand for environmental, biodegradable, and renewable materials has driven significant research into the valorization of lignocellulosic biomass. Among its primary components, lignin, the second most abundant natural polymer, represents an underutilized but valuable biopolymer with potential applications in bio-based industries. Through its conversion, lignin can be transformed into various high-value products, such as biofuels, bioplastics, and chemicals. This process not only enhances the economic feasibility of bio-based industries but also helps reduce waste and fosters a circular economy. However, its extraction comes with constraints associated with environmental, technological, and economic limitations. In this study, we assess various pre-treatment processes for lignin extraction based on their sustainability and efficiency. Various methodologies including organosolv, deep eutectic solvents (DES), enzymatic hydrolysis, and hydrothermal treatments are analyzed for their potential to align with circular bioeconomy principles. While green methodologies offer reduced environmental impact, challenges persist in terms of cost-effectiveness, yield optimization, and upscaling. This work highlights the critical need for standardized metrics to assess the “greenness” of lignin extraction methods and their industrial realization potential. Ultimately, these findings aim to contribute to a sustainable transition towards fossil-free material sources, aligning lignin valorization strategies with global bioeconomy and climate goals.