Lignin, a major component of plant cell walls, has emerged as a promising biofertilizer due to its potential in improving soil fertility and plant growth. This chapter explores the role of lignin in sustainable agriculture, focusing on its chemical composition, biodegradation, and benefits as a soil amendment. Lignin-rich organic matter enhances soil structure, promotes microbial activity, and gradually releases essential nutrients, positioning it as an eco-friendly alternative to synthetic fertilizers. The chapter also discusses lignin’s interactions with soil microorganisms, its impact on plant physiology, and recent advancements in lignin-based biofertilizer formulations. By integrating lignin into modern agricultural practices, we can contribute to sustainable crop production and environmental conservation. The future scope of research on lignin-based biofertilizers, including genetic engineering and nanotechnology applications, is also highlighted.