Disclosed are methods of functionalizing lignin using reactive extraction. The invention also generally relates to functionalized lignin. An exemplary method for producing functionalized lignin is disclosed, which comprises: providing a residue comprising lignin and cellulose; subjecting the residue to a liquid comprising an organic compound, thereby forming a first mixture; wherein the subjecting is performed at a first temperature of about 100° C. or less; and wherein the first mixture comprises: a first liquid fraction comprising solubilized functionalized lignin, wherein the solubilized functionalized lignin is functionalized with the organic compound; and a first solid fraction comprising cellulose.