The recovery of kraft lignin from black liquor allows an increasing of the pulp production of a kraft mill (marginal tonnage) and at the same time provide a valuable material that can be used as energy or chemical feedstock. However, because lignin precipitation is an energy- and material-consuming process, the environmental consequences from a life cycle perspective are under discourse. The aim of this study is to investigate, through the application of consequential life cycle assessment, the potential environmental benefits of kraft lignin recovery and its subsequent use as an energy or chemical feedstock. A newly developed chemical recovery strategy was assessed. The results revealed how the use of lignin as energy feedstock is not environmentally advantageous compared to producing energy directly from the pulp mill's recovery boiler. However, the best results were observed when lignin was used as a chemical feedstock in four applications to replace bitumen, carbon black, phenol, and bisphenol-A.