For the development of the environment-friendly insulating composite materials, natural cellulose (wood chip and sawdust) was used as a core material and activated Hwangtoh was used as a binder. Various specimens were prepared with the water/binder ratio and natural cellulose/binder ratio. The physical properties of these specimens were then investigated through compressive and flexural strength test, absorption test, hot water resistance test, thermal conductivity, measurement of pore distribution and observation of micro-structures using scanning electron microscope (SEM). Results showed that the absorption ratio increased with the increase of natural cellulose/binder ratio but decreased remarkably with the increase of polymer/binder ratio. The compressive and flexural strength development varied appreciably with the increase of water/binder ratio and natural cellulose/binder ratio. On the other hand, thermal conductivity decreased with the increase of natural cellulose/binder ratio and polymer/binder ratio. Through SEM, it was found that activated Hwangtoh that reacted with water formed a hydrate crystal leading to the compact structure and the total pore volume of the specimen using activated Hwangtoh was smaller than that of the non-activated Hwangtoh.