The thermal properties and miscibility of poly(hydroxybutyrate) (PHB) and soda lignin blends were investigated by thermogravimetry analysis (TGA), differential scanning calorimetry (DSC), scanning electron microscopy (SEM) and Fourier transform infra-red spectroscopy (FTIR) over the entire range of composition. Although the addition of soda lignin shifts the onset of PHB decomposition to lower temperatures, the PHB/lignin blends are thermally more stable than PHB over a wider temperature range. The thermal behaviour of these blends as measured by TGA suggests compatibility for the blends containing up to 40 wt% soda lignin. These results correlate well with the glass transition temperature (Tg) data where a single Tg was obtained for these blends. At higher lignin to PHB ratios, two Tgs depicting immiscibility were obtained. The infra-red data show that the miscibility of the blends containing up to 40 wt% soda lignin is associated with specific hydrogen bonding interactions between the reactive functional groups in lignin with the carbonyl groups of PHB.