Lignin is a biologically active compound that exhibits notable antioxidant, antibacterial, and UV-resistant properties, thereby playing a crucial role in sustainable agroforestry systems. This article provides a comprehensive review of strategies aimed at augmenting the biological activity of lignin, with particular emphasis on its applications in regulating plant growth, controlling pests and diseases, and serving as feed additives. The antibacterial properties of lignin present a viable alternative to conventional copper-based pesticides, thereby diminishing the prevalence of plant pests and diseases while fostering ecological sustainability. Additionally, lignin can be utilized as a protective coating material to safeguard wood against fungal degradation. Lignin can also function as a sand-fixing agent to combat desertification, providing both windbreak and vegetation restoration benefits. Using its ultraviolet absorption, biodegradability, antibacterial, and antioxidant features, lignin and its derivatives can be developed into eco-friendly films as substitutes for conventional plastic mulch films. Notwithstanding the encouraging applications of lignin within agroforestry, it is imperative that future research delves deeper into the structure-activity relationship of lignin to fully harness its potential in this field.