A series of glycerin‐crosslinked polyurethane (XPU)‐clay nanocomposites were prepared by in situ polymerization followed by solution casting and thermal treatment. The weight percent (wt %) of clay in the nanocomposites was varied between 0.25 and 10. The structural, rheological and dynamic mechanical properties of the nanocomposites were investigated. X‐ray diffraction (XRD) analysis showed that well dispersed clay platelets were formed in nanocomposites containing up to 1 wt % of clay. Scanning electron microscopy (SEM) showed that poorly dispersed and non‐exfoliated clays were present in composites containing >2 wt % of clay and resulted in phase‐separated disparities within the matrix. Rheological studies demonstrated that processability of polyurethane was significantly improved after clay addition such that solution viscosity decreased by between 76 and 90%. Furthermore, the presence of chemical and physical crosslink networks within the matrix resulted in a remarkable enhancement in the rubbery plateau storage modulus. © 2016 Wiley Periodicals, Inc. J. Appl. Polym. Sci. 2016, 133, 43346.