Lignin-based epoxy resin (LER) was prepared from phenolated lignin (PL) and epichlorohydrin (ECH) in the presence of sodium hydroxide. The eucalyptus acetic acid lignin (AAL) was first reacted with phenol in the presence of sulfuric acid to obtain PL. Then, PL was reacted with ECH in aqueous sodium hydroxide to obtain LER. LER was mixed with diglycidyl ether of bisphenol A (E-44) and then cured with triethylenetetramine (TETA). The initial thermal degradation temperature (Td) of the cured epoxy blends decreased with the increase in LER content. The residue ratio at 500 °C of the cured epoxy blends (R500), however, increased with the LER content. The maximum adhesive shear strength of the cured epoxy blends was obtained at 20 wt% of LER. The water absorption of epoxy blends increased with increasing the content of LER. SEM photos showed that increasing the content of LER increased inhomogeneity and porosity of epoxy blends.