This study explored the feasibility of lignin based biofuel co-product (BCP) for subgrade soil stabilization, and more specifically, its impact on Hot-Mix Asphalt (HMA) pavement performance using the Mechanistic-Empirical Pavement Design Guide (MEPDG). The HMA pavement systems with BCP stabilized subgrade under different traffic and climate conditions were modeled using mechanistic based damage analysis system. The performances of BCP stabilized subgrade and natural soil subgrade sections were compared in terms of fatigue (alligator) cracking and rutting predictions on HMA pavements. The results of this study indicate that BCP stabilization of subgrade soil could achieve more sustainable HMA pavements under different traffic volumes and climate conditions.