Abstract: The development of biomass fuels is of great significance for reducing excessive dependence on fossil resources and global warming. Lignin is a complex aromatic biopolymer that is abundant in nature and can be used to produce high-value biomass fuels. However, due to its complex structure, the use of lignin to produce biomass fuels needs a variety of chemical reactions and catalysts, and the intermediates and products need to be separated many times, resulting in a low yield of products. Multifunctional catalysts can catalyze two or more chemical reactions at the same time; therefore, using them can simplify the preparation process and increase the yield of products. This paper reviewed the research progress of multifunctional catalysts used in the process of lignin hydrocracking, monomer hydrodeoxygenation, and monomer upgrading to polycyclic high-value products, including sulfide catalysts, noble metal elemental catalysts, non-noble metal elemental and alloy catalysts, and phosphide catalysts. Additionally, this work emphasized the interaction between hydrogenation centers (Ru, Pt, Pd, Co, Mo, and Ni) and acid centers (Al₂O₃, ZrO₂, NbOPO₄, zeolite, and mesoporous silicate) in hydrocracking and hydrodeoxygenation. Based on these, the difficulties of the current reactions were then summarized, and the next technical developing directions were anticipated, including those of the development of biomass fuel synthesis methods with more mild reaction conditions and preparation of catalysts with higher activity, higher hydrothermal stability, and lower price. This paper hopes that new methods can reduce the amount of hydrogen, decrease the reaction temperature, and converse lignin to high-value fuels in a one-pot method. Moreover, most research on biomass fuels is still in the laboratory research stage. To realize the large-scale industrial production of biomass fuels and replace petroleum fuels, more in-depth research, perfect supporting facilities, and relevant policies and measures are needed.