The demand for sustainable functional materials with an eco-friendly preparation process is on the rise. Lignocellulosics has been attributed as the most sustainable bioresource on earth which can meet the stringent requirements of functionalization. However, cellulose nanomaterials obtained from lignocellulosics which has reached advanced stages as a sustainable functional material is challenged by its preparation procedures. These procedures can not best be described as sustainable and eco-friendly owning to lots of energy and chemicals spent in the pre-treatment and purification processes. These processes are intended to aid fractionation into the major components in order to remove lignin and hemicellulose for the production of cellulose nanomaterials. This work is thus centred on reviewing the progress achieved in introducing a new cellulose nanomaterial containing lignin. The preparation processes, properties and applications of this new lignin-containing cellulose nanomaterial will be discussed in order to chart a sustainable preparation route for cellulose nanomaterials.