Liquefaction of lignin by hydrogenolysis in the presence of a catalytic composition of metal sulfides which are prepared in situ and in the presence of a lower aliphatic alcohol affords substantially increased yields of monophenols. When methanol is used in the presence of a catalyst which is a mixture of the sulfides of divalent iron, copper, and tin the total monophenols can be as high as 65% with the total cresols being about 45%. Phenol, which is used as a liquefying solvent, can itself be formed in good yield when lignin tar is used as the liquefying solvent. This affords the opportunity of conducting the liquefaction in a continuous fashion using two stages of reaction.