Bio-based polyurethane (PU) foams were developed from bio-polyol (castor oil-based) in the presence of selective catalyst, surfactant, and blowing agent. Bentonite nanoclay (NC) was incorporated into the bio-polyol mixture as nano-reinforcement, while, triethyl phosphate was used as flame-retardant agent. After fabrication, these bioengineered foam nano-composites were studied for microstructural, mechanical and thermal characterizations. Fourier transform infrared spectroscopy analysis indicated the presence of characteristic functionalities within biopolyol segments, which was influenced by reactant activity within the polyurethane (PU) foams. Scanning electron microscopy revealed the cellular morphology of the foam. Thermogravimetric analysis enabled the study of foam decomposition behavior for different sample compositions. Incorporation of NC into pristine foam was found to delay the onset degradation temperature. Flammability studies depicted significant enhancement of flame retardancy with incorporation of NC up to a certain loading level. Compression tests demonstrated that significant improvement of compressive strength properties of foams could be achieved by incorporating bentonite nanoclay, owing to nucleation effect of nanoclay and corresponding enhanced structural integrity.