The main aim of this study is to verify whether cellulose nanocrystal (CNCs)-reinforced tung oil (TO) composites are effective for wood finishes and offer enhanced mechanical and weathering performance owing to the high strength, stiffness, and barrier properties of CNCs. To achieve even dispersion of CNC particles in a polymeric coating film, surface hydrophobization of the CNCs was carried out by grafting poly(lactic acid) oligomers and oleic acid. These new TO coating formulations contain 0 (controlled sample) to 10 wt % of hydrophobized cellulose nanocrystals (hCNCs). The coating performance (degree of wrinkle, leveling, and instantaneous filling) of the hCNC-TO finishes as well as their coating properties (topography, optical properties, mechanical properties, and gas permeability) were investigated in this study. The influence of the hCNC content in the tung oil composite coatings was examined using scratch/impact resistance tests and oxygen transmission rate (OTR) measurements. An increase in the hCNC content led to an increase in scratch/impact resistance as well as a slight decrease in the color-b change, gloss, surface roughness, and OTR value of their film coatings. The hCNC-TO composites for wood coatings presented here showed enhanced performance for utilization in wood-working processes in terms of desired mechanical properties (scratch and impact resistance), weathering performance (color stability), and easy production without any deterioration in surface gloss and roughness after the addition of hCNC to a TO matrix. The hCNC enhanced coating system is a promising candidate for substantial protection of wood surfaces in demanding settings.