Segmented polyurethanes based on toluene diisocyanate (TDI) with three different chain extender diols, viz., propylene glycol (PG), 1,4-butanediol (1,4-BDO), and 1,3-butanediol (1,3-BDO) were synthesized by a two-step, solution polymerization method. These different NR-b-PU block copolymers were incorporated into PVC at various compositions by the solution blending method. These blend systems were subjected to FTIR analysis, DSC, tensile testing, tensile impact measurements, and tensile impact fracture studies by SEM. It was observed that systems showed modification in tensile impact properties. Optimum impact properties were shown at concentrations 6-8% of the block copolymer. At higher compositions there is deterioration in impact properties. High impact properties showed by these blends are attributed to the optimum level of compatibility achieved between the blend components. Tensile impact fracture studies revealed that failure pattern for these blend system transitioned from brittle to ductile fracture. Blends up to 10 wt% of block copolymer showed partially compatible heterogeneous nature exhibiting domain morphology. Blends with higher block copolymer content showed deterioration in tensile strength, modulus, yield strength, and tensile impact strength due to higher particle size of the agglomerated rubber soft segments of the block copolymer.