Lignin based hydrocolloids and nanoparticles (LNPs) are biobased building blocks that have gathered considerable attention recently. LNPs have made it possible to overcome the limitations of lignin such as its heterogeneous structure and stability in aqueous media. Meanwhile, LNPs still suffer from solubility in aqueous alkali and in common organic solvents. Previous efforts to stabilize LNPs have involved crosslinking reactions at aliphatic and phenolic hydroxyl groups of lignin, often using petroleum-based chemicals. This comes at the price of lower reactivity and biodegradability as the intrinsic hydroxyl groups are consumed. Herein, we present a new approach to produce stabilized LNPs that preserve their redox-active phenolic hydroxyl groups. LNPs were prepared from hydroxymethylated softwood kraft lignin and subsequently hydrothermally crosslinked at 150 ⁰C. The stabilized LNPs resist dissolution in alkaline water at pH 13 and remain colloidally stable in polar organic solvents. Additionally, these LNPs inherit the original properties of lignin arising from its native functional groups. We show the possibility of using these stabilized LNPs for reduction of silver ions and as templates for their self-assembly at room temperature in just two hours. This introduces new properties to LNPs like surface plasmon resonance effect that allows using these hybrid nanoparticles as sensors for the detection of hydrogen peroxide with a detection limit of 0.05 mM in a convenient UV-Vis spectrophotometric method. Overall, these stabilized lignin nanoparticles that contain by weight more than 97% of lignin open many new routes to functional hybrid nanomaterials.