Lignin, as a potential precursor of carbon fiber, has the characteristics of abundant reserves, renewable and high carbon content, and its application in the preparation of carbon fibers has substantial cost advantages if some important processing and quality hurdles can be overcome. This paper reviews the preparation process of lignin-based carbon fibers, and moreover, describes the characteristics of carbon fiber prepared by different precursors compared with the presently used precursors. Three preparation methods for lignin-based carbon fibers are introduced: melt spinning, solution spinning, and electrospinning. The applicability, advantages, and disadvantages of the three preparation methods are analyzed from the aspects of process conditions and performance characteristics. Possible directions for future research are considered, with the goal of providing a reference for further study of lignin-based carbon fibers.