A new type of rigid polyurethane foam was produced by incorporating oxazolidone heterocyclic rings on to polyurethane backbones. Epoxidized diethanolamides were synthesized by reacting palm oil blends of epoxidized palm olein and refined bleached deodorized palm kernel olein with diethanolamine to produce rigid polyurethane foams. Epoxides, retained in the diethanolamides, reacted with isocyanate during foam production in the presence of AlCl 3 -THF complex catalyst to form oxazolidone linkages in the polyurethane network. The carbonyl stretch of oxazolidone was identified at 1,750 cm -1 through Fourier Transform Infra Red analysis. Chemical modifications of the polyurethane network also improved the thermal and mechanical properties of the foams. In addition, isocyanate index 1.4 was determined to be the most suitable in the production of foams from this newly synthesized epoxidized diethanolamides.