In this study, shape memory polyurethane/clay nanocomposites were synthesized by using two‐step in situ polymerization. The effects of nanoparticle content on mechanical, thermal, and shape memory properties were studied. Soft and hard segments of polyurethanes were based on polycaprolactone (PCL) diol and 4,4′‐diphenylmethane diisocyanate/1,4‐butanediol molar ratio with 70/30, respectively. The differential scanning calorimetry, tensile test, dynamic mechanical thermal analysis, parallel plate rheometer, and X‐ray diffraction were used to evaluate the properties of the nanocomposites. To evaluate shape memory properties, a tensile device equipped with a thermal chamber was used. Glass transition temperature of soft segments has been increased by nanoclay loading. Addition of nanoclay to polyurethane matrix caused to disrupt ordering in hard domains, decrease in elongation and tensile strength. The results show that crystallinity of soft segments and dispersion of nanoparticles affect on the mechanical properties and shape memory behavior of nanocomposites, distinctly. Nanocomposite containing 1 wt% shows the best shape memory properties. POLYM. COMPOS., 2012. © 2012 Society of Plastics Engineers