An eco‐friendly coating system, which is largely biobased, has been developed from castor and cottonseed oil. Cottonseed oil was functionalized with maleic anhydride by “ene” reaction to give maleinized cottonseed oil (MACSO); the anhydride groups were reacted with isocyanates to yield –NCO terminated polyurethane prepolymer. The prepolymer was further chain extended with hydroxyl groups of castor oil to give polyurethane‐imides (PUIs). The cross‐linked films thus obtained had good mechanical properties, and the imide groups in the backbone improved the corrosion resistance of PUIs as revealed by potentiodynamic polarization study. With increasing content of MACSO, thermal stability, glass transition temperatures (Tg), tensile strength, and corrosion resistance of resulting PUIs significantly increased.