In this study, kraft lignin was used as a polymer for drug-encapsulated nanoparticle synthesis (coumarin 6 and doxorubicin; DOX). Successful drug encapsulation by nanoprecipitation was confirmed (max. 59% for coumarin 6 and max. 73% for DOX). Compared with the pure lignin nanoparticle, drug-encapsulated nanoparticles showed no remarkable change in their size (i.d. 176–469 nm) and surface charge (−40.5 to −32.7 mV) regardless of the drug in the particle. The drug-release profiles of the particles showed that they follow the Fickian diffusion. In vitro cytotoxicity assay revealed that the drug-release effect of DOX-encapsulated nanoparticles was delayed but the anticancer activity was not decreased. In addition, the hemocompatibility test, in vivo allergic reaction test, and tumor inhibition assays using tumors in mice showed high biocompatibility of the lignin-based drug delivery system and reduced side effects during chemotherapy. This study suggests that kraft lignin has great potential as an eco-friendly and economically sustainable drug delivery system.