Abstract The oil scarcity and the rise in earth temperature have elevated the interest in lignocellulosic biorefineries. Lignin has high potential to be used in various applications including the production of biomaterials and transportation fuels. Among the different sources of lignin, organosolv lignin has the advantage of being sulphur-free and of low ash content compared to other types of industrial lignin. The present study focuses on cradle-to-gate life cycle and cost assessment of a novel organosolv lignin production process from spruce bark. The system boundary included production of tannin, lignin from spruce bark and handling of waste including all the inputs (material and energy) and outputs (emissions) in the process. Baseline scenario and scenarios S1 and S2 were compared to identify the most environmentally and economically suitable scenario. The baseline scenario is lignin production with co-production of tannin and tannin free bark (TFB) from spruce bark; scenario S1 is lignin production from TFB; and scenario S2 is lignin production from TFB with mass allocation. The functional unit was 1 kg lignin produced and ReCiPe 2016 Midpoint (H) method was used for the environmental impact assessment. The results showed that the baseline scenario had higher global warming potential (GWP) (2.14 kg CO2eq.) and total cost (1.959 €/kg) than S1 (1.39 kg CO2 eq. and 1.377 €/kg respectively) and S2 (0.23 kg CO2eq. and 0.998 €/kg respectively) scenarios. The results of sensitivity analysis showed that the use of bioethanol instead of ethanol reduced the burden on GWP but increased the burden on the land use impact category.