Petroleum-derived polyurethane using isocyanates by solvent-based processing causes undesired environmental pollution and health effects. Waterborne polyurethane is an alternative to solve this issue, however, they are inefficient as additives and inconvenient for transportation and usage owing to the large amount of water. Herein, water-processable polymethylene polyphenyl polyisocyanate (PAPI, referred as pMDI) powder modified by biobased castor oil is developed. The preparation of pMDI powder is characterized by its appearance, content of –NCO groups, and storage life. The protective mechanism of –NCO groups is explored by a battery of techniques, including microscopies, FTIR, TGA, DSC and reaction kinetics. The optimal formulation for powdered pMDI uses 0.6 wt% SDS prior to de-hydration, which retains a high level of residual –NCO groups up to two-week storage. The formation of polyurea shells covering pMDI powder upon water-processing minimizes contact and interaction between –NCO and moisture in air, blocking consumption of –NCO groups. The pMDI powder can be used as a crosslinking agent for waterborne wood adhesives, showing great bonding performances, particularly improving wet strength (0.84 MPa) at 18 wt% loading level. This strategy offers a simple, green, and cost-effective route to engineer hazardous, high-risk liquid isocyanates into environmentally-friendly, low-risk, and versatile water-processable materials that are suitable as waterborne additives.