Coal water slurry (CWS) has been considered a cleaner and sustainable alternative to coal. However, the challenging suspension of coal particles in CWS has created a major obstacle to its use in industry. This study presents a novel approach to enhance the stability and rheological properties of coal water slurry (CWS) through the utilization of carboxyalkylated lignin (CL) as a dispersant. The generated CL samples had high water solubility of around 9 g/L and a charge density of around 2 mmol/g. All CLs were able to stabilize the coal suspension, and their performance decreased due to the increase in the alkyl chain length of carboxyalkylated lignin. Carboxymethylated lignin (CL-1) improved the stability of the coal suspensions with the lowest instability index of less than 0.6. The addition of CLs reduced the contact angle of the coal surface from 45.3° to 34.6°, and the increase in the alkyl chain length hampered its effect on contact angle changes. The zeta potential measurements confirmed that the adsorption of CL enhanced the electrostatic repulsion between coal particles in suspensions, and the zeta potential decreased with the increased alkyl chain length of CLs due to increased steric hindrance. The rheology results indicated that CLs demonstrated shear thinning behavior. This innovative method showcases the affinity of carboxyalkylated lignin to improve the performance of CWS, offering an environmentally friendly alternative for producing a cleaner product, i.e., sustainable coal water slurry, with improved suspension stability.