Polyhedral oligomeric silsesquioxane (POSS) is added to poly(hydroxyurethane) (PHU) prepolymers to create hybrid PHUs (HPHUs) with enhanced mechanical and thermal properties. These hybrid materials were then further functionalized with 3‐Isocyanatopropyl(trimethoxy) silane (IPTMS) via the pendent hydroxyl bonds within the backbone of the polymers to obtain a final cured film comparable to conventional polyurethanes (PU), using less isocyanate‐functional material. The incorporation of POSS into PHU prepolymers to obtain HPHUs was supported by gel permeation chromatography, fourier tranform infrared spectroscopy (FTIR) and nuclear magnetic resonance analysis. Furthermore, the thermal degradation of the HPHUs was significantly improved with increasing POSS concentration compared to their PHU counterparts as the degradation temperatures at 50% weight loss increased from 263°C for the PHU to 341°C for the HPHU. Gel content tests in tetrahydrofuran (THF), water, and toluene were performed and gel contents of 87%–99% in THF were observed for the cured films. Water swelling, and contact angle tests confirmed that the POSS‐modified films exhibited hydrophobic behavior. Finally, mechanical properties of the cured films were investigated. The Young's modulus and tensile strength were improved with increasing POSS concentration (from 2.0 to 3.1 MPa and from 0.82 to 1.32 MPa, respectively) and elongations at break up to 41.6% were observed. When compared to a conventional PU sealant, the HPHU achieved a tensile strength that was two‐fold greater and a comparable elongation at break (increasing from 24.8% to as high as 41.6%).