In this study, urea (U) and epichlorohydrin (ECH) were used to enhanced the properties of peanut meal (PM)-based wood adhesives and the modification mechanism were investigated. We determined the dry and wet shear strength, apparent viscosity, and solid content of a PM-based adhesive (adhesive A) and of its derivatives modified with U, U/ECH, and ECH (adhesives B, C, and D), respectively. Adhesive C showed dry shear strength of 1.79 MPa (compared with 0.53 MPa for adhesive A), its water resistance was significantly enhanced, and its wet shear strength was 0.92 MPa (compared with 0 MPa for adhesive A). Moreover, compared with adhesive A, the apparent viscosity increased from 819 to 24968 mPa·s, and the solid content of adhesive C increased from 21.60% to 25.14%. The infrared spectra results suggested that ECH reacted with U-treated PM, forming a dense, cross-linked network. Crystallinity of adhesive C reached 11.0% compared with 2.7% for adhesive A, indicating that the molecular structure of the PM protein in adhesive C became more regular and compact, as confirmed by X-ray diffraction measurements. Thermogravimetry tests showed that adhesive C had higher thermal stability than adhesives A, B, and D. Scanning electron microscopy images revealed that adhesive C also exhibited the smoothest fracture surface.