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Lignin is an abundant plant-based biopolymer that has found applications in a variety of industries from construction to bioethanol production. This recalcitrant branched polymer is naturally degraded by many different species of microorganisms, including fungi and bacteria. These microbial lignin degradation mechanisms provide a host of possibilities to overcome the challenges of using harmful chemicals to degrade lignin biowaste in many industries. The classes and mechanisms of different microbial lignin degradation options available in nature form the primary focus of the present review. This review first discusses the chemical building blocks of lignin and the industrial sources and applications of this multifaceted polymer. The review further places emphasis on the degradation of lignin by natural means, discussing in detail the lignin degradation activities of various fungal and bacterial species. The lignin-degrading enzymes produced by various microbial species, specifically white-rot fungi, brown-rot fungi, and bacteria, are described. In the end, possible directions for future lignin biodegradation applications and research investigations have been provided.