In this work vegetable oil based polyol adhesive has been synthesized and characterized by using varied composition of castor oil and palm oil with polyol. Different compositions of castor oil and palm oil are reacted with polyglycol (PG) accompanied with Triethanolamine (TEA) as catalyst and Toluene diisocyanate (TDI) for synthesizing water resistant  polyurethane adhesive. Mixture of biodegradable oil sources was used for developing environmental friendly adhesives. Lap shear test was performed for the evaluation of bio-based polyol adhesive by determining the bond strength with wood. The optimum NCO/OH. ratio of the polyol adhesive was also observed. Furthermore, the hydrophobicity of the polyol was tested at various temperature conditions and mechanical properties as well as degree of swelling were also studied. The chemical resistance of developed adhesive is good both in hot and cold water and in acidic and alkaline medium slight lap shear strength deterioration was observed. The hydrophobic nature of polyol adhesive to water uptake resistance provided comparable results to other synthetic sources. Petrochemical based adhesive are toxic, environmentally damaging and expensive may become the reason for development of polyurethane adhesive which was low in cost as compared to other sources obtained from petrochemical industries.