Lignin containing cellulose nanofibrils (LCNF) were obtained by mechanically fibrillating unbleached tree bark after alkaline extraction and used as a reinforcement in thermoplastic starch (TPS) to develop novel biodegradable composite films. With the addition of 15 wt % LCNF, the tensile strength and modulus of the composites increased by 319 % and 800 % compared to neat TPS films, respectively. The crystalline property of cellulose and the high interaction between TPS and LCNF improved the mechanical property of the composite films. The composite film T_onset and T_max were 263.1 °C and 316.5 °C, respectively, compared to 250.5 °C and 297.3 °C for neat TPS. The composite films also showed higher water barrier property. Experimental results showed that LCNF features a high lignin content. Lignin, a natural polymer, contains hydrophobic and aromatic groups and, thus, can increase the water barrier property and thermal stability of TPS/LCNF composite films.