Windmill palm fiber, a high-quality cellulose resource, can be extracted from discarded palm sheath. However, the application of this abundant biomass in composite reinforcement is limited due to its hydrophilicity. In this study, the effects of chemical modifications, such as treatment with alkali, acetyl chloride, and acetic anhydride, on the micro-morphology, water repellence, sound absorption, thermal conductivity, and thermal stability of windmill palm fiber have been investigated. The results showed the surface of windmill palm fiber treated with alkali to be relatively long, thick, and smooth. In comparison, acetylation treatment destroyed the cell walls, leaving micro-holes in the surface. Acetylation modification significantly improved the water repellence of the fibers, increasing the water static contact angle to more than 145°. Acetylation treatment also improved the sound absorption performance of a fiber mat, giving an average sound absorption coefficient of 0.47, maintained a low thermal conductivity of under 0.050 W/m/K, and improved the thermal stability, raising the initial decomposition temperature to above 350°C.