Liquefaction of sawdust was studied using glycerol and methanol as mix solvents. A new bio-polyol product consisting of high purity multi-hydroxy compounds was obtained by precipitation of the hydrophobic organics from the liquefied product in an aqueous solution. As identified by GC-MS, the dominate components in bio-polyol were glycerol, glycerol derivatives, and multiple types of sugar derivatives. By using the mass ratio of m (sawdust) : m (glycerol) = 1 : 1, the total content of multi-hydroxy compounds reached 90.84%. The hydroxyl number of the bio-polyol was 1287 mgKOH/g with a rotational viscosity of 1270 cP. Preparation of polyurethane foams using bio-polyol and isocyanate was also studied. Water was used as an environmental friendly blowing agent. The factors that influence the cell structure of foams (i.e., catalyst, dosage of blowing agent, and mass ratio of bio-polyol to PEG-400 were studied. The compressive strength of the synthesized foam was 150 Kpa, which met the requirement of Chinese specification for rigid foams. The synthesized foams were characterized by FTIR, SEM, and TG. © 2013 Wiley Periodicals, Inc. J. Appl. Polym. Sci. 2014, 131, 40096.