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The focus of the present study is to utilize a by‐product obtained during extraction of tocopherols, a valuable vitamin E compound, from sea buckthorn (SBT) oil and in doing so find a reliable alternative to petrochemical based polyols. Bio‐based polyurethane (PU) is prepared by using SBT oil based fatty acid methyl ester polyesteramide polyols (SBTPEP) with toluene diisocyanate (TDI). The fatty acid methyl ester is converted to the corresponding fatty amide by reaction with diethanolamine. The formed fatty amide is then esterified with phthalic anhydride to synthesize polyesteramide polyol. Characterization techniques used to evaluate polyesteramide polyol are Fourier‐transform infrared spectroscopy (FTIR) and NMR. The cured PU coating is also put through various mechanical tests to analyze the physical properties. The cured PU coating shows good surface and mechanical properties. It shows a gloss value of 87.4 and passes impact, adhesion, and chemical resistance tests. It is hydrophobic which is evident from its contact angle of 100.2°. It has good thermal stability which is evident by its glass transition temperature of 53.9 °C. Use of phthalic anhydride contributes to the bio‐based characteristics of synthesized PU. Practical Application: The present study presents a synthesis route which has minimal dependence on hazardous feedstock by utilization of green feedstock. The results obtained from physical and mechanical evaluations favor the use of this PU formulation in the coating sector. The adhesion and impact strength test results show potential application in the industrial sector coatings where the applied coat must be able to withstand high levels of physical stress and strain. The presence of aromatic rings and oil‐based moiety, that is the fatty acid hydrocarbon chain, contributes to the hydrophobic nature of the PU coating. Hydrophobic coatings have tremendous application in various fields such as marine coatings, automotive, electronics, and decorative coatings. These are potential fields of application for the synthesized green PU coating obtained from tocopherol extraction by‐products.