An environmentally friendly water-based pathway to form the azide derivatives of soybean oil and fatty esters is reported. This entails first the formation of epoxides and then the azidization of the epoxides. The azidization reaction is carried out at high yields in water with only a small amount of an ionic liquid as a catalyst. The distribution of azide and alcohol functionalities on the fatty acid moiety is approximately random. This reaction has been applied to methyl oleate, methyl linoleate, soybean oil, and methyl soyate. The resulting structures have been studied by NMR.