Urea-modified lignin was prepared according to the Mannich reaction and well characterized by Fourier transform infrared spectrometer, elemental ananlyses, and scanning electron microscopy (SEM). Ammonium polyphosphate (APP) and urea-modified lignin were added into poly(lactic acid) (PLA) as a novel intumescent flame-retardant (IFR) system to improve flame retardancy of PLA. The flammability of IFR–PLA composites was studied using limiting oxygen index, UL-94 vertical burning method and cone calorimeter test, and their thermal stability was evaluated by thermogravimetric analysis. The results showed that the urea-modified lignin combined with APP exhibited much better flame retardancy and thermal stability than that of the combination of virgin lignin and APP. The improvement may be attributed to the better char morphology with more phosphoric char evidenced by SEM and X-ray photoelectron spectroscopy. POLYM. ENG. SCI., 2012. © 2012 Society of Plastics Engineers