Conspectus The increasing demand for polymeric materials derived from petroleum resources, along with rising concerns about climate change and global plastic pollution, has driven the development of biobased polymeric materials. Lignin, which is the second most abundant biomacromolecule after cellulose, represents a promising renewable raw material source for the preparation of advanced materials. The lucrative properties of lignin include its high carbon content (>60 atom %), high thermal stability, biodegradability, antioxidant activity, absorbance of ultraviolet radiation, and slower biodegradability compared to other wood components. Moreover, the advent of lignin nanoparticles (LNPs) over the last ten years has circumvented many well-known shortcomings of technical lignins, such as heterogeneity and poor compatibility with polymers, thereby unlocking the great potential of lignin for the development of advanced functional materials. LNPs stand out owing to their well-defined spherical shape and excellent colloidal stability, which is due to the electrostatic repulsion forces of carboxylic acid and phenolic hydroxyl groups enriched on their surface. These forces prevent their aggregation in aqueous dispersions (pH 3-9) and provide a high surface area to mass ratio that has been exploited to adsorb positively charged compounds such as enzymes or polymers. Consequently, it is not surprising that LNPs have become a prominent player in applied research in areas such as biocatalysis and polymeric composites, among others. However, like all ventures of life, LNPs also face certain challenges that limit their potential end-uses. Solvent instability remains the most challenging aspect due to the tendency of these particles to dissolve or aggregate in organic solvents and basic or acidic pH, thus limiting the window for their chemical functionalization and applications. In addition, the need for organic solvent during their preparation, the poor miscibility with hydrophobic polymeric matrices, and the nascent phase regarding their use in smart materials have been identified as important challenges that need to be addressed. In this Account, we recapitulate our efforts over the past years to overcome the main limitations mentioned above. We begin with a brief introduction to the fundamentals of LNPs and a detailed discussion of their associated challenges. We then highlight our work on: (i) Preparation of lignin-based nanocomposites with improved properties through a controlled dispersion of LNPs within a hydrophobic polymeric matrix, (ii) Stabilization of LNPs via covalent (intraparticle cross-linking) and noncovalent (hydration barrier) approaches, (iii) The development of an organic-solvent-free method for the production of LNPs, and (iv) The development of LNPs toward smart materials with high lignin content. Finally, we also offer our perspectives on this rapidly growing field.