Lignin, one of the most abundant renewable feedstock, is used to develop a biocompatible hydrogel as anti-infective ointment. A hydrophilic polyoxazoline chain is grafted through ring opening polymerization, possess homogeneous spherical nanoparticles of 10-15 nm. The copolymer was covalently modified with triazole moiety to fortify the antimicrobial and antibiofilm activities. The hydrogel was capable of down regulating the expression level of IL-1β in LPS induced macrophage cells, and to cause significant reduction of iNOS production. It supported cellular anti-inflammatory activity which was confirmed with luciferase assay, western blot, and NF-κB analysis. This novel lignin-based hydrogel tested in-vivo has shown the abilities to prevent infection of burn wound, aid healing, and an anti-inflammatory dressing material. The hydrogel reported here provides a new material platform to introduce a cost-effective and efficient ointment option after undertaking further work to look at its use in the area of clinical practice.