Two component waterborne polyurethane system for wood can be formulated with hydrophilically modified HDI based polyisocyanate and hydroxyl contained polyacrylate. Due to high tension and viscosity relative to the polyol dispersion high shear is needed to disperse the polyisocyanate into the polyol. Investigation was made to compare mixing methods for dispersing. Film formation mechanism of waterborne polyurethane coating is different from solvent based polyurethane coating and polymer emulsion coating system. Pot life of waterborne polyurethane system should be determined by its hardness or gloss change with time instead of viscosity change. It is found that in clear coating of waterborne polyurethane the reaction between isocyanate and hydroxyl dominates and in pigmented coating the reaction between isocyanate and water dominates.