The development of a new class of polyurethane polyols from cardanol, a renewable organic resource obtained as a byproduct of the cashew industry, is reported. For synthesizing polyols the monoglycidyl ether of cardanol was prepared first, followed by ring opening to prepare the diol or reaction with diethanol amine to give a triol. Alternately, another triol was also prepared by reaction of the glycerol monochlorohydrin with cardanol. Polyols having a range of hydroxyl values (140-265 mg of KOH/g) were prepared, and structure characterization was carried out by spectroscopic techniques. Polyurethanes were formulated by reaction of these polyols with diphenyl methanediisocyanate (MDI) at an NCO/OH ratio of 1, and films were characterized for thermal stability and viscoelastic properties by thermogravimetric analysis (TGA) and dynamic rheometry, respectively. The dynamic mechanical studies show a linear increase of the T-g value with an increase in the hydroxyl value of the polyol. In TGA, when temperatures at 50% decomposition in nitrogen atmosphere are compared, polyurethanes based on diol and glycard indicate a higher thermal stability.