Abstract: Soil cadmium (Cd) pollution poses a severe threat to agricultural productivity and environmental health. As a highly toxic and mobile heavy metal, Cd readily enters the food chain through crop uptake, posing grim risks to human health. This study systematically elaborates on the multi-dimensional mechanisms and application prospects of lignin and its derived materials in the remediation of Cd-contaminated soils. As plant-derived renewable functional materials, lignin and its derived materials exhibit a unique synergistic effect of “chemical passivation-microbial regulation-plant physiological response” due to its three-dimensional aromatic network structure, multiple functional groups, and environmental compatibility. From the perspective of chemical passivation, lignin and its derived materials directly immobilize Cd through mechanisms such as ion exchange, surface complexation, and precipitation. In addition to direct adsorption, these materials indirectly reduce Cd bioavailability by modulating key soil properties and active components. This includes elevating soil pH and cation exchange capacity (CEC) to promote the precipitation of Cd(OH)₂, increasing soil organic matter (SOM) to enhance Cd complexation, and interacting with iron oxides to facilitate the formation of stable Cd-bearing mineral phases. These processes collectively drive the transformation of Cd from labile, bioavailable forms (e.g., exchangeable and carbonate-bound) to stable, residual fractions. In terms of microbial regulation, lignin and its derived materials act as a preferential carbon source and niche modifier, selectively enriching and reshaping soil microbial communities. They promote the proliferation of specific functional bacteria (e.g., Pseudomonas and Burkholderia) and fungi (e.g., Trichoderma), which contribute to Cd immobilization through biosorption, biomineralization (e.g., inducing CdS formation), and the stimulation of microbial-mediated nutrient cycling (e.g., phosphorus solubilization), thereby exerting a biologically enhanced passivation effect. From the perspective of plant physiology, lignin and its derived materials mitigate Cd phytotoxicity and inhibit Cd translocation by directly and indirectly regulating plant physiological processes. They alleviate Cd-induced oxidative stress by enhancing the activities of antioxidant enzyme systems. Moreover, they protect the photosynthetic apparatus, improve the photosynthetic efficiency, and positively influence hormonal signaling to promote seed germination, root development, and overall plant growth, thereby constructing a holistic internal defense network against Cd stress. This review summarizes the application performance of various lignin and its derived materials in Cd contamination remediation, evaluating their efficiency in reducing soil Cd bioavailability and crop Cd accumulation. Furthermore, it highlights prevailing challenges, including environmental sensitivity (e.g., pH-dependent efficacy), cost-benefit ratios compared with conventional amendments, and uncertainties regarding long-term stability and ecological risks. Future research should prioritize a systematic understanding of the lignin–microbe–plant interaction network, employ machine learning to optimize modification processes for enhanced Cd-targeted adsorption, and strengthen life-cycle ecological risk assessments to advance the engineering application and sustainable agricultural use of lignin-based materials.