In 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. 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.