In this experiment, lignin was modified through phenolation and then used to synthesize hydrogels with polyvinyl alcohol (PVA). The highest yield in phenolation was achieved at 120 °C with a Lignin/Phenol ratio of 1/4 and 10% sulfuric acid charge, resulting in a yield of 123%. Successful phenolation of lignin was indicated by the increasing yield and the intensity of the bending vibration of the phenolic hydroxyl group (O–H) at 1356 cm − 1 in the FTIR spectra. A remarkable difference was observed between hydrogels containing phenolated lignin (PhL) and non-phenolated lignin (L). PhL had a yield of 98%, while L yielded 88% at a 1:1 Lignin/PVA ratio. When the PVA/L ratio was changed to 1:2, L was unable to form a stable hydrogel. Instead, it formed a soft, jelly-like liquid after 24 h. On the other hand, PhL was able to form a stable hydrogel up to a 1:5 PVA/PhL ratio with 78% yield. Additionally, the phenolated hydrogel showed higher mechanical stability than the L hydrogel. However, the L-PVA hydrogel had a higher swelling ratio than the PhL-PVA hydrogel.