Different techniques have been developed to overcome the recalcitrant nature of lignocellulosic biomass and extract lignin biopolymer. Lignin has gained considerable interest owing to its attractive properties. These properties may be more beneficial when including lignin in the preparation of highly desired value-added products, including hydrogels. Lignin biopolymer, as one of the three major components of lignocellulosic biomaterials, has attracted significant interest in the biomedical field due to its biocompatibility, biodegradability, and antioxidant and antimicrobial activities. Its valorization by developing new hydrogels has increased in recent years. Furthermore, lignin-based hydrogels have shown great potential for various biomedical applications, and their copolymerization with other polymers and biopolymers further expands their possibilities. In this regard, lignin-based hydrogels can be synthesized by a variety of methods, including but not limited to interpenetrating polymer networks and polymerization, crosslinking copolymerization, crosslinking grafted lignin and monomers, atom transfer radical polymerization, and reversible addition-fragmentation transfer polymerization. As an example, the crosslinking mechanism of lignin-chitosan-poly(vinyl alcohol) (PVA) hydrogel involves active groups of lignin such as hydroxyl, carboxyl, and sulfonic groups that can form hydrogen bonds (with groups in the chemical structures of chitosan and/or PVA) and ionic bonds (with groups in the chemical structures of chitosan and/or PVA). The aim of this review paper is to provide a comprehensive overview of lignin-based hydrogels and their applications, focusing on the preparation and properties of lignin-based hydrogels and the biomedical applications of these hydrogels. In addition, we explore their potential in wound healing, drug delivery systems, and 3D bioprinting, showcasing the unique properties of lignin-based hydrogels that enable their successful utilization in these areas. Finally, we discuss future trends in the field and draw conclusions based on the findings presented.