AbstractIn the two‐stage recovery of natural cashew nut‐shell liquid (CNSL) by solvent extraction, the overall yields from half‐shells obtained by mechanical cutting and from chilled fragmented shells (to solidify the phenols) by manual processing are identical, indicating that no physical loss of phenolic material occurs in the mechanical process. At the first stage, prior to comminution, the yield from intact half‐shells of mechanical origin is considerably less than that from manually processed shells due to extensive internal fracturing of the shell structure and greater solvent penetration in the latter case. Static solvent extraction of macerated shells gave the same yield as Soxhlet extraction, but the filtration stage was difficult and large volumes of solvent were required. Soxhlet solvent extraction or ultrasound/solvent extraction of manually processed shells at ambient temperature gave similar yields and economy in solvent usage. Both were much superior to mechanical agitation. By catalyzed decarboxylation of the recovered natural CNSL an almost theoretical yield (25%) of phenolic lipid rich in cardanol was obtained, which is considerably higher than that (10%) in the traditional recovery of technical CNSL by the hot oil bath industrial method. Natural CNSL contains a predominant amount of anacardic acid and represents a novel phenolic lipid source. Chemical reduction with air/aqueous hydrazine gave saturated natural CNSL. Polymerization of natural CNSL was effected in alkaline solution with paraformaldehyde.