The invention provides an oil modified phenolic resin binder. Components of the binder comprise 30-50% of vegetable oil, 30-50% of phenolic resin and 5-40% of an organic solvent. The oil modified phenolic resin binder utilizes terminal hydroxymethyl with active group to perform Diels-Alder addition reaction with double bonds of alkylphenol oil-soluble phenolic resin and the vegetable oil. The oil modified phenolic resin binder can be obtained by processes including heating and cooling twice, insulating by adding the phenolic resin and cooling by adding the organic solvent. The oil modified phenolic resin binder enhances transparency of products by improving polymerization process, and ensures stable viscosity within shelf life and no thick skinning over on the surface of the binder.