Modified soy-based vegetable oil polyols were successfully incorporated as a replacement for conventional polyols to produce flexible slabstock polyurethane foams. The oil was characterized for its hydroxyl value and fatty acid composition. The modified oils had higher hydroxyl values and lower unsaturated acids than regular unmodified oils. Three different modified polyols were used to investigate the reactivity with isocyanates. The effects on the foaming reaction of two different isocyanates, namely TDI and MDI, were investigated. The reactions were also carried out with a mixture of polyols containing synthetic polyols and vegetable oil-based polyols to delineate the effect of each component. FTIR technique was used to identify the sequence of chemical reactions during the foaming process. The effect of water levels and isocyanate content on the kinetics of the foaming reaction was investigated. Information regarding the formation of hard and soft segments with the varying compositions was obtained. As the water content increased, the amount of the hard segment and urea formation increased in both soy oil polyols and synthetic polyols. Increased synthetic polyols in the mixture increased the rate of reaction and phase mixing due to the availability of primary hydroxyl groups. Scanning electron microscopy (SEM) and small-angle X-ray scattering (SAXS) were used to probe the morphology. As the water content increased, the cell size increased. At lower water content a more uniform cell structure was evident and at higher water levels hard domain size increased.