Pyrolysis oil (PO) assisted Kraft lignin (KL) liquefaction over an unsupported NiMoS catalyst in a paraffin solvent was explored in this work. A paraffin solvent was used to represent hydrogenated vegetable oil (HVO) which is a biofuel. We have for the first time showed that when co-processing Kraft lignin with pyrolysis oil in a paraffin solvent the char formation could be completely suppressed. The complex composition of PO, containing various compounds with different functional groups, was able to aid the depolymerization pathways of lignin by obstructing the condensation path of reactive lignin derivatives. To further understand the role of different functional groups present in pyrolysis oil during lignin liquefaction, we investigate the co-hydroprocessing of Kraft lignin with various oxygenate monomers using unsupported NiMoS. 4-propylguaiacol (PG) was found to be the most efficient monomer for stabilizing the reactive lignin intermediates, resulting in a low char yield (3.7%), which was 4 times lower than the char production from Kraft lignin hydrotreatment alone. The suppressed rate of lignin fragment repolymerization can be attributed to the synergistic effect of functional groups like hydroxyl (-OH), methoxy (-OCH3), and propyl (-C3H7) groups present in PG. These groups were found to be able to stabilize the lignin depolymerized fragments and blocked the repolymerization routes enabling efficient lignin depolymerization. It was found that the presence of a co-reactant like PG during the heating period of the reactor acted as a blocking agent facilitating further depolymerization routes. Finally, a reaction network is proposed describing multiple routes of lignin hydroconversion to solid char, lignin-derived monomers, dimers, and oligomers, explaining why the co-processing of pyrolysis oil and Kraft lignin completely suppressed the solid char formation.