The invention discloses a lignin modified asphalt composition and a preparation method thereof. The lignin modified asphalt composition comprises 60-98 percent of residual oil and/or asphalt, 1-30 percent of lignin and 0.5-10.0 percent of stabilizing agent, wherein the stabilizing agent is extract oil and/or coal tar. The extract oil and/or coal tar is utilized as the stabilizing agent so as to uniformly and stably disperse the lignin in the asphalt, obviously reduce the sedimentation rate of the lignin in the asphalt, improve the stability of the lignin modified asphalt and benefit the industrialized production of the lignin modified asphalt.