A unique polyurethane (PU) elastomer containing inorganic polyhedral oligomeric silsesquioxane (POSS) molecules as molecular reinforcements in the hard segment was investigated by means of wide-angle X-ray diffraction (WAXD), small-angle X-ray scattering (SAXS) and transmission electron microscopy (TEM) techniques. The mechanical properties of POSS modified polyurethane (POSS-PU) were also compared to those of polyurethane without POSS. The crystal structures of two different POSS molecules were first determined by X-ray powder diffraction analysis, yielding a rhombohedral cell with a = 11.57 Angstrom, alpha = 95.5 degrees for octacyclohexyl-POSS (1,3,5,7,9,11,13,15-octacyclohexylpentacyclo[9.5.1.13,9.15,13] octasiloxane). and a = 11.53 Angstrom, alpha = 95.3 degrees for hydrido-POSS (1-[hydridodimethylsiloxy]-3,5,7,9,11,13,15-heptacyclohexylpentacyclo [9.5.1.13,9.15,15.17,13] octasiloxane). WAXD results showed that reflection peaks distinct to POSS crystal diffraction were seen in POSS-modified polyurethane, which suggests that POSS molecules formed nanoscale crystals in the hard domain. During deformation, the average size of POSS crystals in POSS-PU was found to decrease while elongation-induced crystallization of the soft segments was observed at strains greater than 100%. The SAXS results showed microphase structure typical of segmented polyurethanes, with an initial long spacing of 110 Angstrom between the domains. At high strains, the average length of strain-induced microfibrillar soft-segment crystals was estimated to be about 60 Angstrom by SAXS. The TEM analysis of highly stretched samples showed a preferred orientation of deformed hard domains perpendicular to the stretching direction, indicating the destruction of hard segment domains by strain.