This paper addresses the effects of soft-segment on clay particle exfoliation and resultant mechanical and thermal properties of nanocomposites of reactive layered silicate clay and thermoplastic polyurethanes (TPU). The composites were synthesized via a two-step bulk polymerization scheme from polyether- and polyesterpolyols of molecular weight 2000, diphenylmethanediisocyanate, butanediol, and up to 5 wt% reactive layered silicate clay. It was found that the extent of tethering reactions between polymer chains carrying residual –NCO groups and reactive clay particles was significant, although did not depend on the nature of polyol used. Nanocomposites were obtained only in the case of polyesterpolyol, which can be attributed to both clay–polymer reactions and higher viscosity in the clay–polymer mixing step. These nanocomposites showed 125% increase in tensile stress, 100% increase in elongation, and 78% increase in tensile modulus along with 130% increase in tear strength and a 60% reduction in volume loss in abrasion test. It was observed that hydrogen bonding did not influence the properties and the extent of hydrogen bonding was not affected by the clay particles.