Polyether- and polyester-based thermoplastic polyurethane (TPU) nanocomposites containing the montmorillonite modified with quaternary ammonium salts having a relatively long hydroxyalkyl branch (MMT-OH) were prepared via solution mixing. Quaternary ammonium salts with dimethyl, octyl, hydroxyundecyl branches were synthesized by the addition reaction of dlimethyloctylamine and 11-bromo-1-undecanol and were used for the preparation of MMT-OH. In this MMT-OH clay, hydroxyl groups are located at the outer end of the relatively long undecyl branch, which may make the hydroxyl groups more exposed to the matrix polymers compared to the clays with the modifiers having shorter hydroxyalkyl chain such as C30B. Actually, more hydroxyl groups in MMT-OH's are thought to be exposed outside the modified clay, since MMT-OH's were observed to be somewhat dispersed in water, while clays with shorter alkyl chains were not. From XRD and TEM results, the silicate layers of MMT-OH were shown to be very well dispersed in ether-TPU and ester-TPU nanocomposites prepared from dimethyl acetamide solution. In the case of ester-TPU nanocomposites, much better clay dispersion was observed for nanocomposites containing MMT-OH than the ones with C30B in the TEM images. The tensile properties measurement showed the similar trend. Although MMT-OH has only one hydroxyl group while C30B has two, above results of better tensile properties and water dispersibility of MMT-OH than C30B having two hydroxyls indicate that the position of hydroxyls may be a important factor in determining the properties of TPU/clay nanocomposites. Fourier transform infrared spectroscopy analyses showed that the long hydroxyalkyl chain modifiers may provide more hydrogen bonding sites than short hydroxyalkyl chain modifiers. (C) 2008 Wiley Periodicals, Inc. J Appl Polym Sci 110: 3209-3216, 2008