Abstract <p>Lignin, the most abundant renewable source of aromatic compounds on earth, remains underexploited in traditional biorefining. Fraxetin, a naturally occurring flavonoid, has garnered considerable attention in the scientific community due to its diverse and potent biological activities such as antimicrobial, anticancer, antioxidant, anti-inflammatory, and neurological protective actions. To enhance the green and value-added utilization of lignin, <i>Saccharomyces cerevisiae</i> was engineered as a cell factory to transform lignin derivatives to produce fraxetin. The expression of scopoletin 8-hydroxylase (S8H) and coumarin synthase (COSY) enabled <i>S. cerevisiae</i> to produce fraxetin from ferulic acid, one of the three principal monomers. The optimized fermentation strategies produced 19.1&#xa0;mg/L fraxetin from ferulic acid by engineered <i>S. cerevisiae</i>. Additionally, the engineered cell factory achieved a fraxetin titer of 7.7&#xa0;mg/L in lignin hydrolysate. This study successfully demonstrates the biotransformation of lignin monomers and lignin hydrolysate into fraxetin using a <i>S. cerevisiae</i> cell factory, thereby providing a viable strategy for the valorization of lignin.</p> Key points <p><i>• AtS8H showed substance specificity in the hydroxylation of scopoletin.</i></p> <p><i>• AtCOSY and AtS8H were key enzymes for converting ferulic acid into fraxetin.</i></p> <p><i>• Yeast was engineered to produce fraxetin from lignin hydrolysate.</i></p>