The aim of this research was to investigate the influence of lignin modified by ionic liquids on physical and mechanical properties of plywood panels bonded with the urea-formaldehyde (UF) resin. For this purpose, soda bagasse lignin was modified by the 1-ethyl-3-methylimidazolium acetate ([Emim][OAc]) ionic liquid and then the various contents of unmodified and modified lignins (10, 15, and 20%) were added at pH=7 instead of second urea during the UF resin synthesis. The physicochemical properties of the prepared resins as well as the water absorption, shear strength, and formaldehyde emission of the plywood panels made with these adhesives were measured according to standard methods. According to Fourier Transform Infrared (FTIR) Spectrometry, by treatment of lignin, the C=O, C-C, and C-H bonds decrease while the content of the C-N bond dramatically increases. Based on the finding of this research, the performance of soda bagasse lignin in UF resins dramatically improves by modification by ILs; as the resins with modified lignin yielded lower formaldehyde emission and water absorption when compared to those made from unmodified lignin and commercial UF adhesives, respectively. The shear strength as well as wood failure percentages are lower for the panels produced with modified lignin than for the panels produced with UF resins alone.