The full utilization of plant biomass for the production of energy and novel materials often involves high temperature treatment. Examples include melt spinning of lignin for manufacturing low-cost carbon fiber and the relocalization of lignin to increase the accessibility of cellulose for production of biofuels. These temperature-induced effects arise from poorly understood changes in lignin flexibility. Here, we combine molecular dynamics simulations with neutron scattering and dielectric spectroscopy experiments to probe the dependence of lignin dynamics on hydration and thermal history. We find a dynamical and structural hysteresis: at a given temperature, the lignin molecules are more expanded and their dynamics faster when the lignin is cooled than when heated. The structural hysteresis is more pronounced for dry lignin. The difference in dynamics, however, follows a different trend, it is found to be more significant at high temperatures and high hydration levels. The simulations also reveal syringyl units to be more dynamic than guiacyl. The results provide an atomic-detailed description of lignin dynamics, important for understanding lignin role in plant cell wall mechanics and for rationally improving lignin processing. The lignin glass transition, at which the polymer softens, is lower when lignin is cooled than when heated; therefore extending the cooling phase of processing and shortening the heating phase may offer ways to lower processing costs.