A new linear saturated terminal diisocyanate was synthesized from oleic acid via Curtius rearrangement, and its chemical structure was identified by FTIR, H-1 and C-13 NMR, and MS. The feasibility of utilizing this new diisocyanate for the production of polyurethanes (PUs) was demonstrated by reacting it with commercial petroleum-derived polyols and canola oil-derived polyols, respectively. The physical properties of the PUs prepared from fatty acid-derived diisocyanate were compared to those prepared from the same polyols with a similar but petroleum-derived commercially available diisocyanate: 1,6-hexamethylene diisocyanate. It was found that the fatty acid-derived diisocyanate was capable of producing PUs with comparable properties within acceptable tolerances. This work is the first that establishes the production of linear saturated terminal diisocyanate derived from fatty acids and corresponding PUs mostly from lipid feedstock.