Recycling of postconsumer poly (ethylene terephthalate) (PET) is a worldwide concern due to large increasing volume of these materials produced by society. In the present study, we report the effect of gamma irradiation on degradation of PET and its subsequent effect on glycolysis by using excess ethylene glycol (EG). The results as analyzed by molecular weight determination showed that extent of depolymerization of PET were dose dependent. The doses of 30, 50, 70, and 100 kGy resulted in decrease in the molecular weight by about 15%, 25%, 30%, and 40% respectively. The irradiated waste PET samples were further subjected to glycolysis using EG by conventional and microwave method which resulted in increased yield of monomeric product, bis (2-hydroxyethylterephthalate) (BHET). The recycled material, BHET, was then used in combination with bio-based monomers to prepare a new eco-friendly polyester polyol which was analyzed for hydroxyl, saponification, acid value and further characterized by FTIR, (HNMR)-H-1, and GPC techniques for molecular weight determination. Polyurethane coatings were prepared from the polyester polyol and various commercial polyisocyanate curing agents. The coated films were evaluated for their performance properties. Thermal properties of coatings were investigated by differential scanning calorimetry and thermogravimetric analysis. POLYM. ENG. SCI., 55:2653-2660, 2015. (c) 2015 Society of Plastics Engineers