Polyurethane/cellulose nanocrystal nanocomposites with ultrahigh tensile strength and stain-to-failure with strongly improved modulus were prepared by adding cellulose nanocrystals (CNCs) during the preparation of prepolymer. The nanostructure of this polyurethane consisted of individualized nanocellulose crystals covalently bonded and specifically associated with the hard polyurethane (PU) microdomains as characterized by Fourier transform infrared spectroscopy and transmission electron microscopy. The storage modulus and thermal stability of the nanocomposites were significantly improved as measured by dynamic mechanical analysis. This was due to a combination of CNCs reinforcement in the soft matrix and increased effective cross-link density of the elastomer network due to CNC-PU molecular interaction. Tensile test revealed that the nanocomposites have both higher tensile strength and strain-to-failure. In particular, with only 1 wt % of cellulose nanocrystals incorporated, an 8-fold increase in tensile strength and 1.3-fold increase in strain-to-failure were achieved, respectively. Such high strength indicates that CNCs orient strongly at high strains and may also induce synergistic PU orientation effects contributing to the dramatic strength enhancement. The present elastomer nanocomposite outperforms conventional rubbery materials and polyurethane nanocomposites reinforced with microcrystalline cellulose, carbon nanotubes, or nanoclays.