• An innovative BPMA was synthesized by BPU and VB. • BPU and VB are chemically crosslinked by urethane bond, resulting in satisfactory compatibility of BPMA. • BPU exhibits an appropriate crosslinking density, which results in an improved ductility of BPMA. • BPMA shows a suitable construction allowance time and good working performance. Sustainable bio-oil, as a modifier and partial substitute for asphalt binder, is potentially reducing dependence on non-renewable petroleum asphalt in pavement engineering. However, unsatisfactory performance of bio-oil asphalt dramatically hinders the application of bio-oil in pavement engineering. In this paper, bio-oil based polyurethane modified asphalt (BPMA), an innovative way of modifying bio-oil asphalt binder, was explored to prepare a sustainable asphalt binder with satisfactory performance. BPMA was synthesized by virgin asphalt and bio-based polyurethane (BPU), in particular, BPU was pre-assembled by castor oil, isosorbide, and isocyanate. The formulation and synthesis process of BPU were investigated via mechanical property test and fourier transform infrared spectroscopy (FTIR). Attributed to the addition of isosorbide, BPU exhibited a significant decrease in crosslinking density and a remarkable improvement in ductility. Furthermore, BPMA containing various contents of BPU at different curing duration were systematically studied by rotational viscosity, storage stability, fluorescence microscopy, FTIR, dynamic shear rheometer and bending beam rheometer to evaluate workability, compatibility, modification mechanism, working performances. Results showed that BPMA exhibited suitable workability, good compatibility, and satisfactory working performance. Moreover, the microstructure of BPMA transformed from VB-phase dominated island structure to BPU-phase dominated spatial network structure as BPU content increased. FTIR results indicated a combination modification mechanism of physical modification (effect of BPU) and chemical modification (chemical crosslinking between BPU and VB).