Lignin is classified as the second most abundantly available biopolymer after cellulose and as a main aromatic resource material. Lignin structure differs based on sources of origin and species of biomass with around 15–40% of lignin content based on dry weight. It is extracted from various types of lignocellulosic biomass through different pulping extraction methods. After extraction, lignin can be further functionalized through different chemical reactions to meet the requirements and specifications before being used in end products. Therefore, in this review paper, the details on extraction and the type of lignin, as well as chemical functionalization, are discussed. The chemical functionalization can be used to modify the lignin such through phenolic depolymerization or by other aromatic compounds, creating novel chemical active sites to impact a reactivity of lignin and through functionalization of hydroxyl functional group for enhancing its reactivity. Furthermore, the recent sustainable application of lignin was discussed in different fields such as nanocomposite, flame retardant, antioxidant, cosmetic, natural binder and emulsifier. This review hence provides a summary of the current stateoftheart in lignin technology and future outlook of potential application areas.