Sustainable polyurethane coated fertilizer is attracting much attention. Reducing the amount of curing agent is promising to improve the bio-content and biodegradability of coating material. In order to achieve the aim, the research attempted to select palm oil with balanced unsaturation as feedstock, hydrochloric acid as both catalyst and nucleophilic reagent for bio-polyols with low hydroxyl values by the epoxidation/ring-opening reaction. The chemical structures of palm oil-based polyols and properties of polyurethanes were tailored by controlling hydrochloric acid amount, and the effect was investigated by Fourier transform infrared spectroscopy (FTIR), nuclear magnetic resonance (NMR), etc. With the increase of hydrochloric acid amount, hydroxyl value, functionality and viscosity of palm oil-based polyol were gradually increased. The resultant coatings prepared by the palm oil-based polyol with hydroxyl value exceeding 120 mg KOH g−1 and functionality of more than 2 had good macroscopic performances including controlled nutrient release property as a result of high crosslinking density. The optimum amount was 10%, for the viscosity of the relative palm oil-based polyol was beneficial to the coating process. The bio-content of the coating was 67% and the nitrogen release duration of the coated urea was 73 days at the coating rate of 7% even without paraffin. Overall, the way offers a bio-based platform to create a variety of polyurethane coated fertilizer that promises economic and environmental benefits.