Liquefaction of waste paper (WP) was conducted in the presence of polyhydric alcohols to prepare biodegradable polyurethane foam. The liquefied-WP-based polyol had suitable characteristics such as apparent molecular weight, hydroxyl value, and viscosity for the preparation of rigid polyurethane foam and was successfully applied to produce polyurethane foam with the appropriate combinations of foaming agents. The obtained foams showed satisfactory densities and mechanical properties as good as those of foams obtained from liquefied wood- and starch-based polyols. The foams had almost the same thermal stability at initial weight loss and seemed to be potentially biodegradable because they were degraded to some extent in leaf mold. There were no mutagens or carcinogens in the water extracts of the foams.