Hydroxyfunctional compounds suitable for use in the polyisocyanate polyaddition process are obtained from polyurethane and/or polyurethane polyurea waste by decomposition with an alcohol and subsequent reaction of the alcoholysis products to reduce their content of low molecular weight, sterically unhindered aromatic amines. In this process, polyurethane and/or polyurethane polyurea waste is first treated with a low molecular weight diol or polyol at a temperature of from about 160 to 260.degree. C. The resultant alcoholysis product may then either be further heated at a temperature lower than that used in the first step within the ranger of from about 50 to 180.degree. C. or reacted with a dialkyl carbonate and/or 1,3-dicarbonyl compound.