Lye is a Chemical Compound, it's used in a variety of things; food preparation, lutefisk(a Norwegian fish product you never want to eat!),olives, ramen noodles. Also a stronger version is used in common drain cleaners, oven cleaners, etc. It's extremely caustic; meaning it can cause severe chemical burns if it comes into contact with bare skin.
Lye is actually Sodium Hydroxide. it is a caustic soda. It's metallic and Alkali salt. So basically is a chemical and then again it's not. If I was taking a test, I would answer, Yes, it's a type of chemical.