Lignin, a natural macromolecule containing substantial aromatic rings and abundant hydroxyl groups, was firstly chemically grafted with phosphorus–nitrogen-containing groups via a liquefaction–esterification–salification process to prepare lignin-based phosphate melamine compound (LPMC). And then the LPMC which has remaining hydroxyl groups was used to substitute parts of polyols and copolymerize with isocyanate to produce lignin-modified-PU foam (PU-LPMC) with excellent flame retardancy. Owing to the rigid aromatic structure of lignin and the covalent linkages between LPMC and the polymer–matrix, PU-LPMC showed a nearly 2-fold increase in compression strength and excellent performance of thermal stability, char residue formation, self-extinguishment and inhibition from melt-dripping and smoke generation. Moreover, a large amount of non-flammable gases were released during thermal degradation and a compact and dense intumescent (C–P–N–O)_x char layer formed on the surface of the foams after combustion, resulting in the improvement of anti-flaming properties of the polymer by the flame retardancy of both gas phase and condensed phase.