Kraft lignin has been widely investigated for the production of composite plastics by blending with different synthetic polymers. In the present study, softwood kraft lignin‐polyethylene (PE) composites are produced by extrusion. The change in lignin structure during the extrusion has been investigated and the influences of the lignin structure change on the properties and recyclability of the composites have been investigated. Extrusion reduces the content of functional groups in lignin (especially aromatic OH group) and decreases its glass transition temperature, but increases its weight‐average molecular weight and polydispersity index. In the lignin‐PE composites, lignin and PE only blend at the macroscopic level and there is no intermolecular interaction between them. Because extrusion reduces Tg and particle size of lignin, a lower temperature is needed to reprocess the lignin‐PE composites. These recycled composites have similar thermal properties, but enhanced mechanical properties. This work shows that lignin can be used as a potential component to reduce the usage of synthetic polymers, thus partially eliminating white pollution.