A new class of thermoplastic elastomers has been created by introducing nanoscale-dispersed lignin (a biomass-derived phenolic oligomer) into nitrile rubber. Temperature-induced controlled miscibility between the lignin and the rubber during high shear melt-phase synthesis allows tuning the material's morphology and performance. The sustainable product has unprecedented yield stress (15-45 MPa), strain hardens at large deformation, and has outstanding recyclability. The multiphase polymers developed from an equal-mass mixture of a melt-stable lignin fraction and nitrile rubber with optimal acrylonitrile content, using the method described here, show 5-100 nm lignin lamellae with a high-modulus rubbery interphase. Molded or printed elastomeric products prepared from the lignin-nitrile material offer an additional revenue stream to pulping mills and biorefineries.