Urea is a commonly used fertilizer. Due to its high water-solubility, misuse easily leads to excess nitrogen levels in the soil. The aim of this research was to develop an economically feasible and biodegradable slow-release coating for urea. For this purpose, lignin was selected as coating material. From four commercially available lignins, two lignosulfonates (Wafex P and Borresperce), a softwood kraft (Indulin AT) and soda flax lignin (Bioplast), the latter showed the best potential with respect to film forming properties. Bioplast dispersions up to a dry matter content of 50% are processable. However, high losses during processing resulted in thin coating layers on the urea granules. To reduce urea release, hydrophobic compounds and crosslinkers were added to the Bioplast dispersions. Addition of alkenyl succinic anhydride (ASA) significantly decreased the release of urea in water. However, complete release of urea still occurred within one hour, which can be explained by a low reactivity of the selected compounds towards lignin, too low percentages of applied coating or negative effects of the selected compounds on the film forming process. In addition, urea partly dissolves in the aqueous lignin dispersions due to its high water-solubility. This causes incorporation of urea in the lignin layer, which results in coatings with a low water resistance. This was improved by application of an inner coating layer with high dry matter content. In conclusion, lignin shows high potential as coating material. For industrial application, more insight in the film forming properties is desired.