Polyester-polyurethane nanocomposites based on unmodified and modified montmorillonite clays were compared in terms of their morphology, mechanical, thermal, and adhesive properties. Excellent dispersion of the modified nanoclay in polymer with 3 wt% loading was confirmed from X-ray diffraction, and low-, and high-magnification transmission electron micrographs. The properties of the clay-reinforced polyurethane nanocomposites were a function of nature and the content of clay in the matrix. The nanocomposite containing 3 wt% modified clay exhibits excellent improvement in tensile strength (by similar to 100%), thermal stability (20 A degrees C higher), storage modulus at 25 A degrees C (by similar to 135%), and adhesive properties (by similar to 300%) over the pristine polyurethane.