Montmorillonite (MMT) modified with siloxane diamine was reacted with a reactant obtained from 4,4'-diphenyl methane diisocyanate (MDI) and polyester type polyol, Nippollan 4010 (Mn 2000). Finally, polyurethane (PU)/MMT composites were prepared by using 1,4-butane diol as a chain extender in 25 wt% solution of N,N-dimethyl acetamide (DMAc). It was expected that these nanocomposites had superior exfoliation property to that of MMT dispersed polyurethanes produced by simple mixing due to insertion of siloxane main chain to the silicate interlayer of MMT. Extent of reaction and formation of final products were analysed by using FT-IR spectroscopy. DIspersion into the PU and intercalation of MMT were identified by applying X-ray diffraction (XRD) and transmission electron microscopy (TEM). Tensile data were acquired by universal test machine (UTM). Thermal stability and variation of surface energy were characterized by thermal gravimetric analysis (TGA) method and measurement of contact angle on the synthesized composites, respectively. As the results the organo-MMT modified with siloxane diamine in the PU composites has an intercalated structure relatively well-expanded rather than a completely exfoliated structure. The tensile strengths and the moduli for the PU/organo-MMT composites were drastically enhanced in comparison to those of PU/Na+ -MMT composites.