A novel hydroxyl-terminated polymer HPMS-APE was synthesized by introducing allyl polyethylene oxide (APE) into hydrogen-terminated polydimethylsiloxane (HPMS) backbone by hydrosilylation reaction. A series of hyperbranched polyurethane elastomers (HBPUs) based on HMPS-APE and polypropylene glycol (PPG) mixed soft segments were successfully synthesized with trimethylolpropane (TMP) as a chain extender. The effect of HPMS-APE segments content on enhanced properties of HBPUs were characterized by Fourier transform infrared spectroscopy (FT-IR), differential scanning calorimetry (DSC), atomic force microscopy (AFM), thermogravimetric analysis (TGA), mechanical testing and water absorption. It was found that incorporating HPMS-APE in polyurethanes made substantial changes in their morphology, thermal properties, mechanical properties and water absorption. When 5 wt% HPMS-APE was incorporated in HBPUs, the extent of microphase separation between hard and soft segments was the best, resulting in polyurethanes without significant compromise in tensile strength and elasticity. Furthermore, HBPUs derived from HPMS-APE presented excellent thermal stability and unique water resistance.