Due to its unique features and wide availability, lignin, a complex aromatic polymer found in plant cell walls, holds significant potential for sustainable uses. In order to improve lignin’s reactivity and broaden its range of applications, this chapter addresses how to functionalize it by altering its phenolic hydroxyl groups. Enzymatic treatments and chemical techniques including hydroxyl group substitution, etherification, and esterification are important lignin modification techniques. Because of these changes, functionalized lignin has better qualities and may be used in bio-composites, adsorbents, and bioplastics. Optimizing lignin’s performance in eco-friendly technologies requires an understanding of the processes and results of lignin functionalization. In addition to highlighting functionalized lignin’s promise as a flexible material in the search for sustainable solutions, this analysis offers insights into many existing techniques.