There is a need to develop circular and sustainable economies by utilizing sustainable, green, and renewable resources in high-tech industrial fields especially in the pharmaceutical industry. In the last decade, many derivatives of food and agricultural waste have gained considerable attention due to their abundance, renewability, biocompatibility, environmental amiability, and remarkable biological features. Particularly, lignin, which has been used as a low-grade burning fuel in the past, recently attracted a lot of attention for biomedical applications because of its antioxidant, anti-UV, and antimicrobial properties. Moreover, lignin has abundant phenolic, aliphatic hydroxyl groups, and other chemically reactive sites, making it a desirable biomaterial for drug delivery applications. In this review, we provide an overview of designing different forms of lignin-based biomaterials, including hydrogels, cryogels, electrospun scaffolds, and three-dimensional (3D) printed structures and how they have been used for bioactive compound delivery. We highlight various design criteria and parameters that influence the properties of each type of lignin-based biomaterial and corelate them to various drug delivery applications. In addition, we provide a critical analysis, including the advantages and challenges encountered by each biomaterial fabrication strategy. Finally, we highlight the prospects and future directions associated with the application of lignin-based biomaterials in the pharmaceutical field. We expect that this review will cover the most recent and important developments in this field and serve as a steppingstone for the next generation of pharmaceutical research.