AbstractLignin, as an industrial by‐product, can be used as a phenolic substancen. In this study, enzymatic hydrolysis lignin (L) was treated with potassium ferrate and phenol respectively to obtain oxidized lignin (OL) and phenolated lignin (PL). Their phenolic hydroxyl content (PhOH) increased by 29.1% and 40.5%, respectively. Then four kinds of epoxy resins were prepared, namely lignin‐free epoxy resin (LFER), L epoxy resin (LER), PL epoxy resin (PLER), and OL epoxy resin (OLER). Gel permeation chromatography (GPC) and Fourier transform infrared analyses indicated that potassium ferrate oxidation could decline the molecular weight (Mw) and increase the PhOH of L. Mechanical properties test and dynamic mechanical analysis (DMA) results show that cured OLER (OLEN) has higher crosslinking density and better mechanical properties (shear strength increased by 14%, tensile strength increased by 15%) than cured LER (LEN). Thermogravimetric analysis results show that OLEN has better thermal stability than cured LFER (LFEN) and LEN. In addition, scanning electron microscopy images showed that the modified L had better compatibility. This study presents a novel approach for lignin oxidation.