The first examples of thermoset polyurethane−clay nanocomposites have been prepared by curing a polyurethane network in the presence of alkylammonium-exchanged forms of montmorillonite. A unique stress−strain behavior was observed for the elastomeric nanocomposites. The reinforcement effects of the silicate nanolayers not only greatly improved the tensile properties of the matrix but the strain-at-break also increased with increasing clay loading. Thus, nanocomposite formation both strengthens and toughens the elastomeric matrix compared to the pristine polymer.