Urea is a universal fertilizer, but its use efficiency hardly exceeds 30−35%, and more than 70% is lost to the environment, causing eutrophication in aquatic systems. This research focuses on encapsulating urea molecules using a ligninchitosan composite. The nanocomposite was developed as a suitable carrier for entrapping nitrogenous fertilizer. Coconut coir contains plenty of lignin, which was extracted using the organosolv process by using ethanol as a solvent. Organosolv lignin (OSL) yielded spherical lignin nanoparticles (LNPs) via the solvent displacement method. Finally, a nitrogen source was loaded into the chitosan/lignin nanocomposite fertilizer (lignorea), which consists of LNPs, chitosan, and a cross-linker. The nanocomposite was characterized using PSA, SEM, TEM, UV−vis, FTIR, and XRD. The morphology of the OSL and LNPs was examined under SEM (626 ± 40 nm) and TEM (26 ± 9 nm). The noncrystallinity of both lignin and crystallinity after entrapment in nanocomposite was validated by XRD. The specific functional group pertaining to the lignin backbone had aromatic vibrations at 1511 cm −1 (OSL) and 1507 cm −1 (LNPs), and the presence of an amide peak after loading N was observed in FTIR. The lignin samples have their corresponding spectral absorbance at 281 and 288 nm wavelengths obtained in UV−vis. The size and stability of the extracted OSL and LNPs were verified by a particle size analyzer and zeta potential, respectively. The compatibility and interactions of the developed nanofertilizer were confirmed with molecular modeling and simulation. The developed nanofertilizer has total nitrogen of 30−35% which slowly releases up to 15 days in the soil. The study clearly suggests that lignin with chitosan served as a perfect template to hold and release N in a regulated pattern that collectively contributes to improved N use efficiency.