Palm oil-based polyester polyol is synthesized by ring opening reaction on epoxidized palm olein by phthalic acid. The reaction is carried out in a solvent free and noncatalyzed condition with the optimal reaction condition at 175°C for 5 h reaction time. The physical state of the product is a clear bright yellowish liquid with low viscosity value of 5700–6700 cP at 25°C and pour point of 15°C. The chemical structure and molecular weight of the polyester polyol were characterized by FTIR, 1H-NMR, 13C-NMR, and GPC. The optimal polyol with molecular weight of 36,308 dalton and hydroxyl value of 78.17 mg KOH/g sample was reacted with polymeric 4,4′-methylene diphenyl diisocyanate (pMDI) at isocyanate index of 1.3 to produce polyurethane adhesive. The lap shear strength of the polyurethane adhesive showed two times higher than the commercial wood adhesives. © 2013 Wiley Periodicals, Inc. J. Appl. Polym. Sci., 2014, 131, 39967.