There has been a growing interest in advanced technology that transforms biomass-derived feedstock into renewable chemicals. Hydrothermal liquefaction (HTL) of lignin into low-molecular-weight fragments (e.g., monomer, dimer, and oligomer), and subsequent catalyzed transformations, offer the promise of unlocking diverse aromatic products. In consideration of the diversity of lignin feedstocks, we shed light on the impact of variations in lignin structure on the conversion efficiency. This review aims to present the latest advances in the HTL of lignin and highlights key factors (reaction solvent, temperature, catalysts, and in particular lignin types) in reductive/oxidative processes by evaluating the yield of aromatic monomers and the selectivity of target products. The mechanistic studies based on lignin model compounds were summarized to provide deep understanding of the reaction pathways to prove the crucial roles of lignin structures and high-performance catalysts in controlling catalytic activity. Finally, we emphasize that advances in emerging HTL technology, catalyst design, and structural analysis hold promise for lignin valorization.