Petrochemical-based adhesives such as urea-formaldehyde and phenol-formaldehyde resins are predominant wood adhesives. In this study, a new wood adhesive from lignin was developed and characterized. The new adhesive consisted of demethylated kraft lignin (DKL), a byproduct in the production of dimethyl sulfoxide from kraft lignin, and a polyethylenimine (PEI). Lap-shear specimens bonded with this new DKL-PEI adhesive system had very high shear strength and were very water-resistant. The effects of the preparation time, the curing conditions, the total solids content of the adhesive, the DKL/PEI weight ratio and the molecular weight of PEI on the shear strength and water-resistance of the resulting lap-shear specimens were studied in detail. Investigation on the curing chemistry of this new adhesive revealed that phenolic hydroxyl groups were oxidized to form quinones that further reacted with PEI. It was proposed that the curing mechanisms of this DKL-PEI adhesive were similar to the quinone-tanning processes in nature.