In this study, a new kind of green, pollution-free, renewable and formaldehyde-free starch adhesive was prepared by using corn starch as raw material, which was oxidized into dialdehyde starch by sodium periodate, and then grafted and cross-linked with polyethylene glycol (PEG) and urea. The PEG-urea-dialdehyde starch adhesive has good dry shear strength and certain hydrophobicity. The preparation parameters of PEG-urea-dialdehyde starch adhesive were optimized by response surface methodology and it characterized by Fourier transform infrared spectroscopy (FT-IR), X-ray diffraction (XRD), Scanning electron microscope (SEM) and X-ray spectroscopy (EDAX). The results showed that when the dosage of PEG was 54% (w/w, dry starch basis), the dosage of urea was 70% (w/w, dry starch basis), the reaction time was 2.4 h, and the reaction temperature was 40 °C, the comprehensive properties of the adhesive were better. The dry shear strength of the PEG-urea-dialdehyde starch adhesive can reach 3.01 MPa, and the water contact angle was 61.76°. When the adhesive was used to bond paper-based materials, the tensile strength, burst strength and ring crush strength of the paper were increased by 17.0%, 16.0% and 42.0%, respectively. This paper provided a new idea for the preparation of the high quality starch-based adhesive, which has a wide application prospect in paper adhesive.