Waterborne polyurethane (WPU) is an environmentally friendly material using water as dispersion medium. However, it is significantly restricted that most of the soft segments in WPUs come from oil. In this work, environmentally friendly and low‐cost castor oil is used as the soft segment of polyurethane, and KH550 modification could improve the thermal stability and flexibility of CWPU. The results show that the particle size of the modified CWPU nano‐emulsion gradually increased to 60.48 nm. Through FTIR and XPS analysis, KH550 is successfully introduced into the castor oil‐based waterborne polyurethane system. After the CWPU‐3% film is treated with NaCl, NaOH, HCl solution and high temperature, the groups in the system remain unchanged which shows CWPU‐3% film having good chemical resistance and high temperature resistance. When the addition amount of KH550 is 3%, the maximum contact angle of the CWPU film was 92.39° which reveals good hydrophobic property. The tensile strength of the films increased from 10.2 MPa to 12.8 MPa, and the elongation at break decreased from 841.3% to 658.9%. The thermal stability of the CWPU films modified by KH550 were also improved. The modified CWPU film has excellent hydrophobicity, chemical resistance and temperature resistance.