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In this work, a novel thinner derived from natural botany Chinese Larch Tree was obtained by combination lignin with phenol using H2O2 as oxidant and the acting efficiency of lignosulfonate in the drilling fluids is greatly enhanced after oxidation with H2O2. Both the chemical structure and the adsorptive ability of the oxidation product are investigated. From experimental results, it was shown that lignin couple with polyphenol and the combination was greatly improved during the process of oxidation under H2O2 in light of the increased molecular weight of the derivative and different major function groups content after oxidation. Furthermore, the oxidized derivative has the good adsorptive-warping ability on the outer surface of particulate clay, which gives great potential for developing novel polymer drilling fluid with good inhibitory and thinning properties.