The work aims to investigate the influence of hydroxylated boron nitride (BN-OH) on the performance of coatings to enhance their thermal conductivity and flame retardancy when used in electronic components coatings. The sonochemical liquid phase exfoliation was used to prepare BN-OH nanoflakes under the alkaline conditions with BN as the thermal/flame retardant element and deionized water as the solvent. A water-based polyurethane, polyisocyanate, and related solvents as well as additives were used to develop a water-based coating with both thermal conductivity and flame retardancy. The microscopic morphologies of BN and BN-OH were observed by scanning electron microscopy (SEM) and transmission electron microscopy (TEM), the chemical structures of BN and BN-OH were characterized by a Fourier transform infrared spectrometer (FT-IR), the crystal structure and morphology of BN and BN-OH were tested using X-ray diffraction (XRD) and Raman spectroscopy, respectively. After coating formulation, the basic properties such as viscosity, fineness, appearance, hardness and adhesion were tested, and the influence of BN-OH on the thermal conductivity and flame retardancy of the coating was studied. The gas emissions of the coating combustion process were analyzed with a thermal gravimetric infrared (TG-IR) instrument, and the morphology of the combustion residue was observed. Hydroxylated boron nitride (BN-OH) could effectively improve the thermal conductivity and flame retardancy of water-based coatings. When the mass fraction of BN-OH in the component A of coating was 3.0%, the thermal conductivity of the coating layer was increased to 0.546 W/(m.K), which was 2.8 times higher than that of the blank sample; Meanwhile, the peak heat release rate (PHRR) of the coating layer were respectively reduced by 35.0% compared with the blank sample. BN-OH could significantly reduce the emission of harmful gases during the combustion of the coating, making the char layer after combustion more compact. Hydroxylated boron nitride can endow coatings with excellent thermal conductivity and flame retardancy, greatly enhancing their application in the field of electrical thermal management, and providing more effective solutions for ensuring safety of electronic components.