With a two-step miniemulsion polymerization, hydrophobic polyurethane (PU) dispersions were prepared with a cosurfactant, the costabilizer hexadecane (HD) in the oil phase, and sodium dodecyl sulfate (SDS) in the water phase. The first step involved the formation of NCO-terminated prepolymers between isophorone diisocyanate and poly(propylene glycol) oligomer in toluene. Next, PU dispersions were produced by a miniemulsion method in which an oil phase containing NCO-terminated prepolymers, HD, the chain extender 1,4-butanediol (BD), the crosslinking agent trimethylol propane (TMP), and the catalyst dibutyltin dilaurate was dispersed in the water phase containing SDS. The influence of experimental parameters, such as the ultrasonication time, concentrations of SDS and HD, and TMP/BD and NCO/OH equivalent ratios, on the sizes of the miniemulsion droplets and polymer particles, as well as the molecular weights and thermal properties of the PU polymer, was examined. The chemical structure of the produced PU polymer was identified with a Fourier transform infrared spectrometer. The molecular weight distribution and average particle size were measured through gel permeation chromatography and dynamic light scattering, respectively. The thermal stability of the PU polymer was characterized with thermogravimetric analysis. (c) 2005 Wiley Periodicals, Inc.