Poly(lactic acid) (PLA) composites with 0.5 wt% lignin or nanolignin were prepared with two different techniques: (a) conventional melt-mixing and (b) in situ Ring Opening Polymerization (ROP) by reactive processing. The ROP process was monitored by measuring the torque. The composites were synthesized rapidly using reactive processing that took under 20 min. When the catalyst amount was doubled, the reaction time was reduced to under 15 min. The dispersion, thermal transitions, mechanical properties, antioxidant activity, and optical properties of the resulting PLA-based composites were evaluated with SEM, DSC, nanoindentation, DPPH assay, and DRS spectroscopy. All reactive processing-prepared composites were characterized by means of SEM, GPC, and NMR to assess their morphology, molecular weight, and free lactide content. The benefits of the size reduction of lignin and the use of in situ ROP by reactive processing were demonstrated, as the reactive processing-produced nanolignin-containing composites had superior crystallization, mechanical, and antioxidant properties. These improvements were attributed to the participation of nanolignin in the ROP of lactide as a macroinitiator, resulting in PLA-grafted nanolignin particles that improved its dispersion.