An alternative technology has been proposed for the dechlorination of poly(vinyl chloride) (PVC) wastes by hydrothermal carbonization (HTC) with lignin. The organic chloride in PVC can be converted to inorganic chloride through hydrolysis, defunctionalization, recondensation, and aromatization in the HTC process. Combined with downstream washing processes by recycling the condensed water, the inorganic chloride with high water solubility is removed from the solid products (i.e., hydrochar). The presence of lignin could significantly improve the dechlorination efficiency of PVC in the HTC process. The dechlorination performance of lignocellulosic components is given as follows: lignin > cellulose > hemicellulose. In addition, lignin can adjust the particle sizes of hydrochars by inhibiting agglomeration in the order of lignin > hemicellulose > cellulose. The hydrochar particles with a low chlorine content and a high heating value could be used as a clean coal-alternative fuel.