Lignin, the second most abundant natural polymer after cellulose, presents substantial potential as a sustainable component for food packaging within the circular bioeconomy. As a byproduct of the pulp and paper industries, it is rich in aromatic structures and functional groups that enable dual functionality: acting as a bio-based reinforcing filler and as an active agent with antioxidant, antimicrobial, UV-blocking, and water vapor barrier properties. Incorporation of lignin into biopolymers such as PVA, PLA, chitosan, and protein-based films enhances tensile strength, crystallinity, and thermal stability while imparting biological activity that protects against microbial growth and oxidation. Despite these advantages, large-scale utilization remains limited due to poor compatibility with hydrophobic polymers, variability in lignin sources, color changes, and strict food safety regulations. Advances in chemical modification, surface treatment, and nanoparticle engineering have been proposed to address these challenges. This review emphasizes recent developments and outlines research directions toward optimizing lignin-based composites for industrial food packaging, contributing to sustainable material innovation in line with circular bioeconomy principles. © The Authors, published by EDP Sciences, 2025.