Lignocellulosic biomass is one of the most abundant bioresources on Earth. Over recent decades, various valorisation techniques have been developed to produce value-added products from the cellulosic and hemicellulosic fractions of this biomass. Lignin is the third major component accounting for 10–30% (w/w). However, it currently remains a largely unused fraction due to its recalcitrance and complex structure. The increase in the global demand for lignocellulosic biomass, for energy and chemical production, is increasing the amount of waste lignin available. Approaches to date for valorizing this renewable but heterogeneous chemical resource have mainly focused on production of materials and fine chemicals. Greater value could be gained by developing higher value pharmaceutical applications which would help to improve integrated biorefinery economics. In this review, different lignin extraction methods, such as organosolv and ionic liquid, and the properties and potential of the extracted chemical building blocks are first summarized with respect to pharmaceutical use. The review then discusses the many recent advances made regarding the medical or therapeutic potential of lignin-derived materials such as antimicrobial, antiviral, and antitumor compounds and in controlled drug delivery. The aim is to draw out the link between the source and the processing of the biomass and potential clinical applications. We then highlight four key areas for future research if therapeutic applications of lignin-derived products are to become commercially viable. These relate to the availability and processing of lignocellulosic biomass, technologies for the purification of specific compounds, enhancements in process yield, and progression to human clinical trials.