In this study, a lignin epoxy resin suitable for wood adhesive was synthesized in an aqueous phase by using lignin as raw material. To study the effect of reaction conditions of lignin epoxidation on the hydroxyl and epoxy groups of lignin-epoxy resin and the bonding strength of plywood, the structure of lignin-epoxy resin was characterized by FT-IR and 31P NMR, and the thermal stability of lignin-epoxy resin was analyzed by TG and DTG. The results showed that the epoxidation reaction mainly took place in the phenolic hydroxyl group. And in the process of epoxidation, the additional amount of NaOH exerted a greater effect on the structure of lignin epoxy resin and the bonding strength of plywood than that of epichlorohydrin. With the increase in the amount of NaOH added in the reaction process, the number of epoxy groups in lignin epoxy resin increased gradually and the bonding strength of plywood showed a trend of increasing firstly and then decreasing. When the molar ratio of a hydroxyl group to NaOH of lignin was 1:1, the bonding strength of plywood made of lignin epoxy resin can reach the maximum, and the wet strength can reach 1.61 MPa, which exceeded the requirements of class II board in Chinese national standard (≥0.7 MPa). SEM was used to study the bonding mechanism, it was found that the structure of cured lignin epoxy resin was more stable and compact when the degree of epoxidation was increased, which led to the improvement of the bonding strength of plywood. However, an excessively high degree of epoxidation will increase the particle size of the adhesive particles, resulting in the inability of the adhesive to form a good mechanical interlocking structure with the wood, thereby reducing the bonding strength of the plywood. Furthermore, the synthesis process of lignin epoxy resin wood adhesive was simplified, the epoxidized system can be directly applied to the wood adhesive, and after 30 days of storage, the bond strength did not decrease significantly. Besides, compared with commercial UF resin wood adhesive, the bonding strength of UF resin can reach the level of commercial UF resin. The results showed that this method may have a great application prospect in the wood adhesive industry.