The effects of temperature and copper catalyst concentration on the formation of graphene-encapsulated copper nanoparticles (GECNs) were investigated by means of X-ray diffraction, Fourier transform infrared spectroscopy-attenuated total reflectance, and transmission electron microscopy. Results showed that higher amounts of copper atoms facilitated the growth of more graphene islands and formed smaller size GECNs. A copper catalyst facilitated the decomposition of lignin at the lowest temperature studied (600 °C). Increasing the temperature up to 1000 °C retarded the degradation process, while assisting the reconfiguration of the defective sites of the graphene layers, thus producing higher-quality GECNs.