Oil palm wood is the primary biomass waste produced from plantations, comprising up to 70% of the volume of trunks. It has been used in non-structural materials, such as plywood, lumber, and particleboard. However, one aspect has not been disclosed, namely, its use in thermal insulation materials. In this study, we investigated the thermal conductivity and the mechanical and physical properties of bio-insulation materials based on oil palm wood. The effects of hybridization and particle size on the properties of the panels were also evaluated. Oil palm wood and ramie were applied as reinforcements, and tapioca starch was applied as a bio-binder. Panels were prepared using a hot press at a temperature of 150 °C and constant pressure of 9.8 MPa. Thermal conductivity, bending strength, water absorption, dimensional stability, and thermogravimetric tests were performed to evaluate the properties of the panels. The results show that hybridization and particle size significantly affected the properties of the panels. The density and thermal conductivity of the panels were in the ranges of 0.66–0.79 g/cm3 and 0.067–0.154 W/mK, respectively. The least thermal conductivity, i.e., 0.067 W/mK, was obtained for the hybrid panels with coarse particles at density 0.66 g/cm3. The lowest water absorption (54.75%) and thickness swelling (18.18%) were found in the hybrid panels with fine particles. The observed mechanical properties were a bending strength of 11.49–18.15 MPa and a modulus of elasticity of 1864–3093 MPa. Thermogravimetric analysis showed that hybrid panels had better thermal stability than pure panels. Overall, the hybrid panels manufactured with a coarse particle size exhibited better thermal resistance and mechanical properties than did other panels. Our results show that oil palm wood wastes are a promising candidate for thermal insulation materials.