The Danish toymaker said it will start making the switch next year and expects plastic bags – used to hold loose bricks – to be completely phased out in the next five years.
Lego and other big brands have been looking for ways to cut plastic use to please customers increasingly worried about how their purchases impact the environment.
Monopoly maker Hasbro has also announced plans to eliminate plastics in its packaging.
Among the environmental issues posed by plastic is that it does not disintegrate. Instead, it breaks down into tiny pieces that can be eaten by birds or other wildlife, endangering their health.
Lego’s colorful bricks are also made of plastic, but the company has had trouble finding another material that is as durable. About 2% of its pieces, such as trees and bushes, are made of sugar cane.
Lego said children had written to the company asking it to drop the plastic bags.
“We have been exploring alternatives for some time and the passion and ideas from children inspired us to begin to make the change,” said chief executive Niels B Christiansen.
The paper bags, which are recyclable, are easier for children to open, the company said.