The massive amount of water-soluble urea used leads to nutrient loss and environmental pollution in both water and soil. The aim of this study was to develop a novel lignin-based slow-release envelope material that has essential nitrogen and sulfur elements for plants. After the amination reaction with a hydrolysate of yak hair keratin, the coating formulation was obtained by adding different loadings (2, 5, 8, 14 wt%) of aminated lignin (AL) to 5% polyvinyl alcohol (PVA) solution. These formulations were cast into films and characterized for their structure, thermal stability, and mechanical and physicochemical properties. The results showed that the PVA-AL (8%) formulation had good physical and chemical properties in terms of water absorption and mechanical properties, and it showed good degradation in soil with 51% weight loss after 45 days. It is suitable for use as a coating material for fertilizers. Through high-pressure spraying technology, enveloped urea particles with a PVA-AL (8%) solution were obtained, which showed good morphology and slow-release performance. Compared with urea, the highest urea release was only 96.4% after 30 days, conforming to Higuchi model, Ritger–Peppas model, and second-order dynamic model. The continuous nitrogen supply of PVA-AL coated urea to Brassica napus was verified by potting experiments. Therefore, the lignin-based composite can be used as a coating material to produce a new slow-release nitrogen fertilizer for sustainable crop production.