This paper investigates the manufacture of polyurethane from pyrolysis bio-oil produced from radiata pine wood. Liquid-liquid extraction was used to separate bio-oil into fractions. These fractions were reacted with methylene diphenyl diisocyanate (MDI) to produce polyurethane. For comparison, a series of polyurethanes were prepared with castor oil in a similar manner. Among the various fractions of the bio-oil, the water-insoluble fraction (often referred to as pyrolytic lignin) was found to be the most appropriate component to produce polyurethane as it is a significant fraction of bio-oil and has a high hydroxyl number, hence, is able to produce a robust film. It was found that gradual addition of the polyol to MDI helped produce a more flexible and stable polyurethane film. Water absorption of bio-oil based polyurethane was found to be higher than that of castor oil based polyurethane. However, the diffusion coefficient of water in the bio-oil derived polyurethane was lower than in castor oil-derived polyurethane. These results suggest bio-oil derived polymers may be suitable for use as protective coatings.