The effect of incorporation of silver nanoparticles (SNPs) in an organic–inorganic metal nanocomposite was investigated. A renewable resource‐based polyurethane (PU) was synthesized by an in situ polymerization method with a polyol: diisocyanate ratio of 1:1.2, an epoxy (glycidol) terminated polyurethane (PE) was prepared by a polyol: diisocyanate: glycidol ratio of 1:3:3, a hydroxy terminated poly (dimethyl siloxane) (HTPDMS) modified PE (PES) was synthesized by the incorporation of 10 wt.% of HTPDMS into the PE and a silver nanocomposite (SNC) was synthesized by the addition of 0.3 wt. % SNPs into the PES matrix. Fourier transform infrared spectroscopy analysis confirmed the existence of NHCOO, Si‐O‐Si and oxirane linkages. The structural analysis was carried by X‐ray diffraction analysis in order to verify the face centered cubic structure of SNPs. The differential scanning Calorimetry analysis and thermogravimetric analysis showed the improved thermal stability by the addition of thermally stable epoxy linkages, high energy siloxane linkages and SNPs. Thus an advanced composite material with desirable properties for industrial applications have been prepared in the current work. POLYM. COMPOS., 39:E2390–E2396, 2018. © 2017 Society of Plastics Engineers