Rheological and rheo-optical experiments have been performed under shear flow on 1% solution of an hydrophobic ethoxylated urethane (HEUR) with a molecular weight of 35 000 and a C18 hydrophobic end-cap. Alter a Newtonian behavior at low shear rates, followed by a slight shear thickening, a pronounced drop in viscosity is observed above a given shear rate. Creep experiments confirms, that above a critical stress a rather long time is required to reach a steady state with a rather low viscosity. Under steady-state conditions at 20 degreesC, birefringence first increases with shear rate until <()over dot> approximate to 5 s(-1), then decreases until <()over dot> approximate to 50 s(-1) and increases upward again. The decrease in molecular orientation is accompanied by a decrease of the transmitted light intensity. On cessation of shear flow, the transmitted intensity increases back to its initial value. This behavior is interpreted in terms of a reversible shear-induced phase separation.