Polyamide 11 (PA) blends based on char-forming industrial lignin and aluminum phosphinate (AlP) were prepared to improve flame retardant (FR) properties using a green and eco-friendly approach. This study investigates the thermal degradation and combustion behavior of PA blends prepared by using AlP in combination with two different types of industrial lignins (i.e., kraft lignin (DL) and lignosulphonate lignin (LL). Thermogravimetric (TG) analysis showed that ternary blends containing LL and AlP developed higher char residue up to 10.7 wt% upon decomposition in inert atmospheres. The combination of lignin and AlP increases the thermal stability by shifting the initial decomposition temperature (T5%) and temperature at maximum decomposition (Tmax) to a higher temperature range, attributed to the stabilization of decomposition products. Furthermore, combustion behavior studied by cone calorimeter (forced combustion) and pyrolysis combustion flow calorimeter (PCFC) tests presented a significant reduction in the peak of heat release rate (PHRR) and total heat release (THR). It was found that LL and AlP-containing blends more effectively decreased fire parameters like PHRR and THR than that of DL and AlP-containing blends. The best interaction with reduced fire-retardant properties was obtained when 10 wt% loading of lignin (DL/LL) and AlP was used. The reduction in heat release parameters was mainly ascribed to the condensed phase mechanism by forming an efficient protective char layer, which acts as a barrier against heat and mass transfer between the condensed and the gas phases. Raman spectroscopy analysis also confirmed the formation of the protective graphitic layer in the condensed phase.