Graphene functionalization by hydroxyalkylation and grafting with polyether polyols enables polyurethane (PU) nanocomposites formation by in situ polymerization with isocyanates combined with effective covalent interfacial coupling. Functionalized graphene (FG) hydroxylation is achieved either by alkylation, transesterification, or grafting of thermally reduced graphite oxide. In the presence of K2CO3 as catalyst the reaction of FG-OH with ethylene carbonate at 180 degrees C affords hydroxyethylated FG, whereas transesterification with castor oil produces riconoleiate-modified FG polyols. In the grafting-from process, FG-alkoholate macro initiators initiate the graft polymerization of propylene oxide to produce hybrid FG polyols containing 38 and 59 wt% oligopropylene oxide. In the grafting-to process 3-ethyl-3-hydroxymethyl-oxetane is cationically polymerized onto FG-OH, producing novel hyperbranched FG-based polyether polyols. Whereas hydroxylation and grafting of FG greatly improve FG dispersion in organic solvents, polyols and even PU, as confirmed by transmission electron microscopy, matrix reinforcement of FG/PU is impaired by increasing alkyl chain length and polyol graft copolymer content.