A magnetic coating formulation is composed principally of magnetic particles and a binder. At least a portion of the binder is a polyurethane resin newly synthesized from a reactant mixture of specific phosphorus compound, epoxy compound, isocyanate compound and polyfunctional hydroxy compounds. The reactant mixture may optionally contain a chain extender. The new polyurethane resin contains one phosphoric acid group or one residual group derived from phosphoric acid per 3,000-200,000 number average molecular weight of the polyurethane resin, and has a number average molecular weight of 4,000-150,000. A magnetic recording medium with a magnetic coating layer formed from the magnetic coating formulation is also disclosed. The magnetic coating layer features not only excellent dispersion of magnetic particles, in other words, excellent magnetic characteristics but also superb durability.