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Lignocellulose fiber obtained from high-altitude plant species Daphne bholua and Daphne papyracea, locally named Lokta bushes, is used in Asian regions to fabricate high-quality handmade paper sheets, packaging materials, composites, and paper bills. A systematic study on the material properties of the fiber to explain the performance of Lokta fiber–based materials has not been reported yet. In this study, the physio-chemical properties of untreated and 1%, 3%, 6%, and 9% NaOH (w/v)-treated Lokta fiber were systematically investigated at ambient temperature. The retting efficiency and cellulose content increased with alkali concentration followed by a decrease in lignin, hemicellulose, and extractives. This observation was consistent with the reduction of lignin and hemicellulose characteristics peaks in the FTIR, a reduction of effective fiber bundle width, and an increase in fiber density. High-resolution scanning electron microscope (SEM) images showed that alkali treatment results in significant loss of cementing materials and separation of fiber bundles. Alkali retting also increased the crystallinity index, tensile strength, and thermal stability. The degradation temperature for untreated, 6% NaOH treated, and 9% NaOH treated samples was found to be 325 °C, 343 °C, and 347 °C; respectively. The findings of this study will be important to optimize the end properties of the Lokta fiber–based paper and composite materials.