The utilization of foamed virgin asphalt in cold recycled mixtures results in insufficient bonding strength between aggregates, leading to rapid deterioration to the recycled asphalt pavement. This ultimately causes inefficient clean production and increased carbon emissions. The foaming performance of thermoplastic resin modified asphalt (TRA) under different foaming conditions was analyzed. Micro-scale chemical and physical tests were utilized to discover the foaming mechanism of TRA. The road performance of cold recycled mixtures with foamed TRA was evaluated through splitting, rutting and fatigue tests. The results showed that the increase in the TRA polar functional group index led to an increase in its surface tension, thus limiting its expansion capacity. However, the increase in the specific heat capacity of TRA indicated that it preserves a low viscosity level essential for its foaming efficacy post-ejection from the foaming machine, thereby enhancing its half-life. Furthermore, the dynamic viscosity of the TRA with an 8% thermoplastic resin dosage exceeded 40000 Pa s at 60 °C, meeting the specification requirements for high viscosity asphalt, while exhibiting a notably lower viscosity of only 120 mPa s at the foaming temperature of 170 °C. The observed low viscosity of the asphalt is anticipated to favorably enhance the formation of a stable foam structure. The mechanical properties and overall road performance of the cold recycled mixture with foamed TRA were significantly enhanced, especially in terms of moisture damage resistance and low-temperature crack resistance. The purpose of this paper is to serve as a valuable reference for investigating the mechanism of modified asphalt foaming and to enhance the efficiency of cold recycled pavement regeneration processes.