Pure biopolymer-based electrospun precursor carbon fibers are fabricated using an abundant and inexpensive biopolymer lignin blended with renewable resource-based cellulose acetate (CA). Iodine treatment on the fabricated green fiber was successfully performed in order to enhance the carbonization process as well as the retention of fiber morphology. The absorption mechanism of iodine by lignin and cellulose acetate and their derived electrospun green fibers has been investigated by means of thermal behavior and morphological retention. It was found that iodine treatment plays a vital role in altering the graphitization behavior as well as morphology retention during the carbonization process. With the help of iodine treatment, the green precursor fibers were successfully converted into thin carbon fibers, and scanning electron microscopy analysis confirmed the retention of fibrous structures with diameters around 250 nm. Raman spectroscopy revealed that although the overall level of graphitization was lower compared to polyacrylonitrile-based fibers, the graphitic crystallite size was larger in the produced carbon fibers. The produced pure biopolymer fibers and iodine treatments show promise for the production of green and cost-reduced carbon fibers.