This study reports the development of polylactic acid (PLA)-based biocomposites modified with microwave-acetylated lignin and reinforced with regenerated cellulose fibers, targeting enhanced mechanical and thermal properties. Lignin acetylation was performed using a catalyst-free microwave-assisted method, yielding improved compatibility with the PLA matrix. Composite blends with varying ratios of PLA, lignin, impact modifier, and fiber loading were processed via extrusion, 3D printing, carding, needle punching, and compression molding methods. Mechanical characterization revealed that composites with higher cellulose fiber content and lignin incorporation demonstrated enhanced impact strength and energy dissipation capabilities. Attenuated Total Reflectance Fourier Transform Infrared Spectroscopy (ATR-FTIR) and thermogravimetric analysis (TGA) confirmed the successful modification of lignin and its influence on thermal stability and char residue formation. Scanning electron microscopy (SEM) provided insights into microstructural changes, such as improved interfacial bonding and reduced fiber pull-out with increasing lignin content. These findings underline the potential of lignin-cellulose PLA composites as a sustainable alternative to traditional materials in automotive and other high-performance applications, combining lightweight design with environmental benefits.