Polyurethanes (PU) are a group of versatile polymers finding a lot of engineering uses due to their favorable and tunable properties and processing advantages. Although considerable amount of work has been reported on the polyurethane-montmorilonite nanocomposite, there is not much literature available on the polyurethane-laponite clay nanocomposite. In this paper, we report the modification of laponite clay with dodecylamine hydrochloride by an ion-exchange process and in situ preparation of polyurethane-laponite clay nanocomposites. Clay incorporation into the polyurethane matrix increased the storage modulus and this trend continues with an increase in clay loading. Thermal stability of the composites was also increased with the clay loading. It was found that modified clay shows a tendency to be preferentially associated with the soft segment of polyurethane; however, the hard domain ordering gets significantly prejudiced at a lower clay loading. On the other hand, at higher clay loading, a nucleating tendency of clay aggregate was observed. The change in length scale of clay aggregation is demonstrated with SEM fractographs of the PU-clay nanocomposites.