Lignin is a major component of cell wall biomass and decisively affects biomass utilisation. Engineering of lignin biosynthesis is extensively studied, while lignin modification often causes growth defects.We developed a strategy for cell‐type‐specific modification of lignin to achieve improvements in cell wall property without growth penalty. We targeted a lignin‐related transcription factor, LTF1, for modification of lignin biosynthesis. LTF1 can be engineered to a nonphosphorylation form which is introduced into Populus under the control of either a vessel‐specific or fibre‐specific promoter.The transgenics with lignin suppression in vessels showed severe dwarfism and thin‐walled vessels, while the transgenics with lignin suppression in fibres displayed vigorous growth with normal vessels under phytotron, glasshouse and field conditions. In‐depth lignin structural analyses revealed that such cell‐type‐specific downregulation of lignin biosynthesis led to the alteration of overall lignin composition in xylem tissues reflecting the population of distinctive lignin polymers produced in vessel and fibre cells.This study demonstrates that fibre‐specific suppression of lignin biosynthesis resulted in the improvement of wood biomass quality and saccharification efficiency and presents an effective strategy to precisely regulate lignin biosynthesis with desired growth performance.