Extruded starch foams are well known as biodegradable alternatives to foamed polystyrene packaging materials. Extruded foams of unmodified starch replacing 1% to 20% of the starch with kraft lignin were prepared. At 10% lignin, there are no deleterious effects on foam density, morphology, compressive strength, or resiliency as compared to a starch extruded foam, yet the foam retains its integrity after immersion for 24 hours in water. At 20% lignin there is a decrease in compressive strength and resiliency. Addition of cellulose fibers restore the mechanical properties but with an increase in density.