Lignin and polyvinyl alcohol (PVA) polymer have both been used as biodegradable materials for many years, enabling the development of eco-friendly composite structures. In this study, a PVA polymer was blended with different proportions of lignin ranging from 0.5 wt% to 10 wt% and their thermal, rheological and moisture absorption behaviours were analysed and compared. According to rheology tests, addition of lignin decreased the viscosity of PVA up to 25% by creating plasticization effect. Thermal tests reveal that the addition of lignin had no significant effect on the melting behaviour of the PVA polymer. However, the amount of char residue increased from 0.48% to 4.15% as the lignin content increased to 10 wt%, indicating improved thermal stability of the PVA polymer. The hydrophobic nature of lignin particles helped to reduce the moisture absorption of PVA polymers up to 6% especially at high wt% lignin loadings.