This study investigates the impact of different substitutions of dihydroxyl dyes on the properties of waterborne polyurethane (WPU) emulsion and its film formation. A waterborne polyurethane emulsion is synthesized using isophorone diisocyanate (IPDI), polytetrahydrofuran (PTMG), N,N-dimethylformamide (DMPA), and 1,4-butanediol (BDO). ARWPUA-1~3 colored polyurethane emulsion is prepared by employing Acid red 87 as a chain extender partly instead of BDO, while ARWPUB-1~3 colored polyurethane emulsion is obtained by partly replacing PTMG with a soft segment. WPU/AR is obtained by physical blending of dye and waterborne polyurethanes. The chemical structure of the samples are characterized through FTIR and UV-vis absorption spectroscopy. Furthermore, this paper investigates the storage stability, solvent resistance, color fastness to dry/wet friction, and mechanical properties of the colored waterborne polyurethanes produced through different substitution processes. Molecular dynamics simulation is employed to analyze the binding energy of polyurethane systems prepared via distinct substitution methods. The experimental findings indicate that ARWPUA-2 exhibits excellent storage stability, with a storage time exceeding 6 months. Moreover, It demonstrates resistance to dissolution when exposed to hot water, NaOH, HCl, toluene, and other solvents. The material also exhibits favorable color fastness to dry/wet friction and possesses high mechanical properties, including increased tensile strength from 13.8 MPa to 22.6 MPa, along with an elongation at break of 810%.