Lignin, an aromatic constituent of woody biomass, is a potential renewable aromatic feedstock for a sustainable future carbon economy. Pyrolysis-based technologies, such as fast pyrolysis and gasification, are promising methods for converting lignin into biochemicals, biomaterials, and biofuels. A better understanding of the molecular mechanisms involved in lignin pyrolysis/gasification would guide the development of the controlled pyrolysis and gasification systems to overcome issues with low product selectivity, an intrinsic drawback of current pyrolysis-based technologies. This review article summaries the state-of-the-art research into molecular mechanisms of lignin pyrolysis and gasification. This information should also be useful for understanding the influence of high temperature heat treatments on the properties of wood.