The pristine lignin molecules contain multiple reactive hydroxyl [OH] groups, some of which undergo limited polymerization depending on their configuration (aromatic or aliphatic) or conformation. The key issue in lignin-polymerization is to quantify the number of hydroxyl groups in the pristine molecules for subsequent activation to specific lignin-polymer chain lengths or degree of grafting. In this study, using ε-caprolactone (CL) as a reactive solvent, we successfully polymerized CL on the [OH] sites in the kraft lignin macromonomers (LM, Mw = 1,520 g mol−1), which resulted in a thermoplastic lignin-polycaprolactone (PCL) grafted copolymer. We found that the average number of [OH] groups in the LM was 15.3 groups mol−1, and further detected 40–71% of the [OH] groups in the CL bulk polymerization. The degree of polymerization of PCL grown on each [OH] site ranged between 7 and 26 depending on the reaction conditions ([CL]/[OH] and reaction-time) corresponding to 4,780 and 32,600 g mol−1 of PCL chains per a LM. The thermoplastic characteristics of the synthesized lignin-PCL copolymers were established by the melt viscosity exhibiting a shear-thinning behavior, e.g., 921 Pa.s at 180 °C. The thermal stability was remarkable providing a Tid (2% of weight loss) of 230 °C of the copolymers, compared with 69 °C for the pristine lignin.