In this paper, the substituent effect on physical properties of whitening lignin prepared by solvent‐controlled encapsulation (SCE) was estimated. Firstly, it was revealed that lignin whitening via SCE requires the modification of alkyl isocyanate containing the alkyl chain with more than four carbon atoms. This indicates the importance of the bulkiness of the substituent of isocyanate moiety for the realization of SCE, i. e., lignin whitening. Secondly, the thermal stability of whitened lignin is dramatically improved by the replacement of the mono‐isocyanate moiety with diisocyanate moiety. Thirdly, the whitened lignin modified by m‐xylylene‐diisocyanate exhibited high thermal stability and electrical insulating properties, suggesting its possible application to insulating fillers for poly(ϵ‐caprolactone).