Developing efficient metal‐free catalysts for lignin valorization is essential but challenging. In this study, a cost‐effective strategy is employed to synthesize a P, N co‐doped carbon catalyst through hydrothermal and carbonization processes. This catalyst effectively cleaved α‐O‐4, β‐O‐4, and 4‐O‐5 lignin linkages, as demonstrated with model compounds. Various catalysts were prepared at different carbonization temperatures and thoroughly characterized using techniques such as XRD, RAMAN, FTIR, XPS, NH3‐TPD, and HRTEM. Attributed to higher acidity, the P5NC‐500 catalyst exhibited the best catalytic activity, employing H2O2 as the oxidant in water. Additionally, this metal‐free technique efficiently converted simulated lignin bio‐oil, containing all three linkages, into valuable monomers. Density Functional Theory calculations provided insight into the reaction mechanism, suggesting substrate and oxidant activation by P‐O‐H sites in the P5NC‐500, and by N‐C‐O‐H in the CN catalyst. Moreover, the catalyst's recyclability and water utilization enhance its environmental compatibility, offering a highly sustainable approach to lignin valorization with potential applications in various industries.