The structural properties of completely condensed and incompletely condensed silsesquioxane in the polyurethane nanocomposites containing 17.5 wt % of silsesquioxane was investigated by FTIR, TGA, scanning electron microscopy (SEM), X-ray diffraction (XRD), and DMA techniques. FTIR spectra shows the existence of hydrogen bonding in the PU-POSS system. The intensity of hydrogen bonding decreases with the increase in POSS-H loading suggesting the prevention of the formation of hydrogen bonding by the addition of POSS-H molecule. SEM analysis reveals the incompatibility of POSS-H molecule in the PU matrices exhibiting greater extent of phase separation and a large number of POSS aggregates on the addition of POSS-H molecule in the PU-POSS matrices. The TGA thermograms show that the POSS-PU hybrids possess excellent thermal stabilities. However, the incorporation of POSS-H molecule leads to a decrease in the thermal properties and only the char yield values increase with the increase in the POSS-H content in the PU-POSS hybrids. The XRD pattern reveals that the crystalline structure of POSS molecules are destroyed by the polymer matrices in the PU-POSS hybrid films. The decrease in the bending storage modulus E' values with the increase in the POSS-H content proves the retardation of hydrogen bonding formation by the POSS-H molecule in the PU-POSS hybrid. (C) 2009 Wiley Periodicals, Inc. J Appl Polym Sci 114:3659-3667, 2009