Lignin, the second most abundant biopolymer found in nature, has emerged as a potential source of sustainable fuels, chemicals, and materials. Finding suitable solvents, as well as technologies for efficient and affordable lignin dissolution and depolymerization, are major obstacles in the conversion of lignin to value-added products. Certain ionic liquids (ILs) are capable of dissolving and depolymerizing lignin but designing and developing an effective IL for lignin dissolution remains quite challenging. To address this issue, the COnductor-like Screening MOdel for Real Solvents (COSMO-RS) model was used to screen 5670 ILs by computing logarithmic activity coefficients (ln(γ)) and excess enthalpies (HE) of lignin, respectively. Based on the COSMO-RS computed thermodynamic properties (ln(γ) and HE) of lignin, anions such as acetate, methyl carbonate, octanoate, glycinate, alaninate, and lysinate in combination with cations like tetraalkylammonium, tetraalkylphosphonium, and pyridinium are predicted to be suitable solvents for lignin dissolution. The dissolution properties such as interaction energy between anion and cation, viscosity, Hansen solubility parameters, dissociation constants, and Kamlet–Taft parameters of selected ILs were evaluated to assess their propensity for lignin dissolution. Furthermore, molecular dynamics (MD) simulations were performed to understand the structural and dynamic properties of tetrabutylammonium [TBA]+-based ILs and lignin mixtures and to shed light on the mechanisms involved in lignin dissolution. MD simulation results suggested [TBA]+-based ILs have the potential to dissolve lignin because of their higher contact probability and interaction energies with lignin when compared to cholinium lysinate.