Kraft lignin is an abundantly available side product from the pulp and paper industry. It has a complex aromatic structure and has great potential to serve as a feedstock for renewable aromatic chemicals. In this communication, we show that a simple mechanochemical pretreatment (viz., ball milling) of commercial Indulin AT kraft lignin before solvent-free hydrotreatment results in a 15% increase in the recovered oil yield with 15% more alkylphenols and a 33% reduction in solids compared to the unmilled sample. This increase raises the carbon efficiency toward the oil based on elemental composition from 76 to 91%, respectively. This enhanced catalytic performance is attributed to improved heat transfer and allowing for better contact between the kraft lignin particles of reduced size and the catalyst particles, prompting enhanced depolymerization at an earlier stage of the reaction, thereby preventing charring.