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There is an environmental concern regarding the use of petroleum-based lubricants, which are generally toxic and nonbiodegradable. Biobased lubricants, such as vegetable oils, are the alternative: they show excellent lubricity, are readily biodegradable and nontoxic. However, a major disadvantage of using vegetable oils in lubricant applications is their lack of thermo-oxidative stability, which can be improved by antioxidant additives. Here, we propose the use of lignin-based additives in biolubricant formulations to improve this feature, based on lignin’s known antioxidant properties. To ensure a stable dispersion in vegetable oil, lignin was partially esterified. Antioxidant properties of lignin before and after palmitoylation were demonstrated in a 2,2-diphenyl-1-picrylhydrazyl (DPPH) assay. Four different lignin-based fractions, commercial Protobind P1000 soda lignin from straw, solvolytically fractionated Protobind P1000 lignin and two lignin fractions from reductively catalyzed fractionation (RCF) of native birch wood, were tested in biolubricant formulations with castor oil as base oil. Those lignin fractions exhibited excellent performance compared to butylated hydroxytoluene (BHT), a commonly used petroleum-based antioxidant. Formulations of modified lignin in castor oil possess improved thermo-oxidative stability, as illustrated by their increased oxidation induction time. Additionally, rheological and tribological tests demonstrate similar, or in some cases improved, lubricating properties compared to castor oil. This study showcases the successful incorporation of lignin-based antioxidants in biolubricant formulations, tackling the major disadvantage of vegetable oils as environment-friendly lubricants.