Ammonium polyphosphate (APP) holds significant potential as a nonhalogenated flame retardant. However, achieving compatibility between polar APP and nonpolar polymer matrices remains challenging. Here, we present a synergistic submicrometer-sized flame retardant system composed of hydrophilic APP encapsulated in lignosulfonate capsules. These lignin nanocontainers (LNCs) are prepared via interfacial cross-linking of lignosulfonate using toluene-2,4-diisocyanate (TDI) in inverse miniemulsion, which is stabilized by polyglycerin polyricinoleate (PGPR), a food additive. Excess isocyanate groups on the surface of the LNCs enable the surface-grafting with hydroxy-functionalized polymers, e.g., poly(lactic acid) (PLA), and enhance the dispersion of APP-loaded LNCs in the PLA matrix. Furthermore, APP-loaded LNCs act as heterogeneous nucleation agents in CO 2 batch foaming. The incorporation of 5−20 wt % LNCs resulted in fine-celled foams, as evidenced by the reduced cell diameters (29 ± 17 μm compared to virgin PLA foams (63 ± 31 μm)) and increased cell density of LNC-loaded PLA foams compared to pristine PLA foams from 2 × 10 7 to 4 × 10 8 cells cm −3 . Notably, the flame retardancy of the LNC-enriched PLA foams was significantly enhanced. The combined carbonization effect of lignin, PGPR, and APP led to an elevated foam char yield, increasing from 0.9 wt % (pristine PLA) to 7.3 wt % (20 wt % LNC-loaded PLA). The experimental limiting oxygen index (LOI) increased from 21% (pristine PLA foams) to 24.5% (20 wt % LNC-loaded PLA foams). UL-94 test proved a V0 rating with only 9 wt % of loaded LNCs. Microcone Calorimeter data further underlines the systematic trend of APP added to the foams with a decreased heat release rate, depending on the amount of FR. Together, our results underline the effectiveness of biobased and biodegradable polymers in lightweight packaging and construction applications with enhanced flame-retardancy.