The disclosed invention provides starting compositions for making lignin hybrid polymers, reactions of lignin and polymer precursors to manufacture lignin hybrid polymers, and final lignin hybrid polymers produced. The most important process requirement is the compatibility of lignin and polymer precursors. Lignin and the polymer precursors must be compatible to assure that the lignin and polymers precursors react and produce a lignin hybrid polymer with useful properties. The lignin hybrid polymers can be in the form of a polyol, a thermoplastic resin, or a thermoset resin. The lignin hybrid polyol, thermoplastic resin, or thermoset resin can be used in a wide range of products including, but not limited to, coatings, adhesives, sealants, elastomers, binders, thermoset resins, thermoplastic resins, and polyurethane systems.