The high abundance and rich chemical structure of lignin attracts research towards its valorization. Incorporation of lignin in thermoplastics, such as polylactide (PLA), is an attractive strategy for reinforcement without reducing the bio-based content. In addition, lignin can provide additional functionalities such as antibacterial and antioxidant properties. The modification of lignin is usually necessary to improve the material performance; however, chemical modification can affect biodegradation. To understand the influence of lignin type on the material properties and degradation mechanism, alkaline, Kraft and acetylated and/or fractionated lignin were blended with PLA. The materials were aged under hydrolytic and simulated composting conditions for up to 30 and 105 days, respectively. The physicochemical properties and morphology of PLA/lignin films were altered depending on lignin type, modification and molecular weight. Films with modified lignin showed higher weight loss and accelerated degradation at initial stages of hydrolytic degradation in comparison to neat PLA. On the contrary, non-modified lignin showed reduced weight loss and rate of degradation in comparison to neat PLA. Partial deacetylation of lignin was demonstrated for all acetylated samples with HSQC (Heteronuclear single quantum coherence spectroscopy) during hydrolytic degradation and with FTIR (Fourier transform infrared) for the composted samples. This work demonstrates how the interplay between lignin molecular weight and structure affects the properties, morphology and degradation process of the blends.