The aim of this research was to improve the bonding of bagasse fiber panels with urea formaldehyde (UF) resins by incorporating oxidized polyethylene (OPE) as a new coupling agent. To reduce the panels formaldehyde emission and to improve their water resistance was an additional aim of this work. Thus, different proportions of OPE (5, 10 and 15%) were added during the UF resin preparation instead to the second urea. The resins were then used in the production of UF-bonded bagasse fiber panels. The physicochemical, structural and thermal properties of the resins as well as water absorption, flexural properties, internal bond strength (IB) and formaldehyde emission of the panels bonded with them were measured according to standard methods. According to the FTIR spectra, the absorbance related to C = C and C = O bonds increased due to the addition of OPE to the UF resin. DSC analysis indicated that in comparison to UF resin, the curing process of UF resin containing OPE occurred at a lower temperature. The gel time shortened and the viscosity increased by the addition of OPE to the UF resin. The panels containing OPE yielded higher IB, flexural modulus and strength compared to those made from pure UF resins. The panels bonded with modified UF resins also showed lower formaldehyde emission and water absorption. Based on finding of this work, the panels containing 15% OPE emitted less formaldehyde, had higher mechanical strength and better dimensional stability than other percentages OPE-modified UF adhesives.