Poor mechanical and barrier properties of starch-based films can be improved by incorporating natural polymer such as lignin. In the present study, novel food packaging films were prepared by casting method from sago palm (Metroxylon sagu) starch (as film matrix with 30% w/w glycerol as plasticizer) by adding lignin isolated from oil palm black liquor waste (from empty fruit bunch), as a reinforcing material (1, 2, 3, 4 and 5% v/w). Results showed packaging films produced by incorporation of isolated lignin to improve selected thermo-mechanical and barrier properties with significant reduction in water vapor permeability, and improved water resistance and seal strength. It is concluded that lignin isolated from oil palm black liquor waste to have great potential to be explored for food packaging purposes. Moreover, this packaging film will be more economical and environmental friendly. (C) 2013 Elsevier Ltd. All rights reserved.