A new class of thermoplastic elastomers has been created by introducing nanoscale-dispersed lignin (a biomass-derived phenolic oligomer) into nitrile rubber. Temperature-induced controlled miscibility between the lignin and the rubber during high shear melt-phase synthesis allows tuning the material's morphology and performance. The sustainable product has unprecedented yield stress (15–45 MPa), strain hardens at large deformation, and has outstanding recyclability. The multiphase polymers developed from an equal-mass mixture of a melt-stable lignin fraction and nitrile rubber with optimal acrylonitrile content, using the method described here, show 5–100 nm lignin lamellae with a high-modulus rubbery interphase. Molded or printed elastomeric products prepared from the lignin-nitrile material offer an additional revenue stream to pulping mills and biorefineries.