A B S T R A C TThe hydrothermal base-catalysed treatment of industrial Kraft lignin (KL) is investigated as a basis for production of a sustainable carbon fibre precursor, with a focus on the time-dependent evolution and impact on precursor properties. Hydrothermal treatment was performed at T = 300°C and p = 180 bar, with the retention time (t ret ) varied between 8, 12, 16, 20, and 24 mins. Molecular weight distribution and thermal stability of the processed lignin were close to maximum after 8 min, and 12-16 min respectively. Chemical modification was found to continue (e.g. demethoxylation) over the entire t ret range (24 min). Analysis of the recovered oily phase indicated catechol derivatives were stable end-products with, e.g., vanillin and guaiacol as intermediates. A techno-economic analysis indicated a price of ca. 1600 €/t at a production capacity of 10 kt/a is achievable, with main cost-drivers being lignin (60%), fixed costs (20%), and energy (10%).