Anionic waterborne polyurethane dispersions were prepared from ring-opening epoxidized linseed oil with glycol and hydrochloric acid followed by saponification, step-growth polymerization, and ionomerization. When the intermediate bio-based polyhydroxy fatty acid has an OH functionality of 4.8, the fatty acid can crosslink, and its carboxylic groups are able to provide surface charge for the stabilization of the resulting polymer in the water phase. Two novel anionic waterborne polyurethane dispersions, one with and one without additional castor oil, were successfully prepared and compared to a conventional control sample. Films from the polyurethane dispersions were obtained by casting the dispersions into molds and subsequently characterized by differential scanning calorimetry, dynamic mechanical analysis, ethanol absorption and uptake, thermogravimetric analysis, and tensile stress–strain tests. The castor oil containing polymer displayed a decrease in glass transition temperature, tensile strength, and Young's modulus, but an increase in elongation compared to the control sample. The sample without the castor oil behaved like a brittle, glassy material with higher Young's modulus and lower ductility because of its relatively high crosslinking density. This work proves the viability of incorporating vegetable-oil based polyhydroxy fatty acids as ionic segments into anionic waterborne polyurethane dispersions.