Highly swellable lignin derivatives were prepared by cross-linking of oxidatively preactivated spruce organosolv lignin (OSL) with poly(ethylene) glycol diglycidyl ether (PEGDGE). The lignin gels obtained are considered to be an environmentally friendly alternative to synthetic hydrogels and superabsorbents and represent a novel type of lignin based functional materials. For their application, it is not only the absorption of water in terms of hydrogel swelling that plays an important role, but also the adsorption and retention of moisture by the corresponding xerogels. To reveal the mechanisms involved in moistening and reswelling of the lignin gels, the interaction of water vapor with lyophilized xerogels was investigated and compared with sorption characteristics of parent lignin. The chemical structure of PEGDGE-modified lignin was investigated using attenuated total reflectance Fourier-transformed infrared spectroscopy and selective aminolysis and was related to its sorption and swelling characteristics. Bound and free water in hydrogels was determined by differential scanning calorimetry and by measuring the free swelling capacity of the gels. Moisture sorption of OSL and PEGDGE-modified lignin xerogels was determined using dynamic vapor sorption analysis. In order to determine monolayer and multilayer sorption parameters, sorption data were fitted to the Brunauer-Emmett-Teller and the Guggenheim-Anderson-de Boer model. Swelling properties of the hydrogels and moisture sorption of the corresponding xerogels were found to be strongly dependent on the degree of chemical modification with PEGDGE: Total and free water content of hydrogels decrease with increasing cross-linking density; on the other hand, water bound in hydrogels and moisture sorption of xerogels at high levels of water activity strongly increase, presumably because of the hydration of hydrophilic oligo(oxyethylene) and oligo(oxyethylene) glycol substituents, which lead to moisture diffusion into the xerogel matrix, plasticization, and swelling of the gels.