Lignin is a complex biopolymer within plant cell walls and consists of several phenylpropanoid subunits. Lignin has broad biomedical applications in treating several diseases due to its antioxidant, antimicrobial, and antidiabetic properties. They possess aliphatic and aromatic hydroxyl groups, which can bind to ligands and induce biochemical modifications in target compounds. Lignin-based nanoparticles (LNPS) have been widely studied for applications in drug delivery, gene delivery, and wound healing. Different techniques like infusion, ion exchange, solvent displacement, coating, emulsion, and adsorption load hydrophilic and hydrophobic drugs onto LNPS. In contrast, drug release is mainly regulated within a pH range of 5.1–7.8. The cheap cost, high biodegradability, low cytotoxicity, and high stability make LNPs suitable drug carriers and notably display a synergistic relationship with chemotherapeutics against cancer cells. Also, their permeability, low immunogenicity, and antimicrobial properties are the characteristics that make them suited for gene delivery and wound healing. However, lignin’s irregular morphological composition makes employing LNPs in biomedical applications challenging. Although LNPs are generally safe to use and offer the aforementioned benefits, each LNP derivative must be individually assessed since their therapeutic outcomes vary significantly due to their complex structural characteristics.