A newly developed kind of layered clay, rectorite (REC), has been used to yield intercalated or exfoliated thermoplastic polyurethane rubber (TPUR) nanocomposites by melt-processing intercalation. Because of the swollen layered structure of REC, similar to that of montmorillonite, organic rectorites (OREC) can also be obtained through ion-exchange reaction with two different quaternary ammonium salts (QAS1, QAS2) and benzidine (QAS3). The microstructure and dispersibility of OREC layers in TPUR matrix were examined by X-ray diffraction and transmission electron microscopy, which revealed not only that the composites with lower amounts of clay are intercalation or part exfoliation nanocomposites, but also that the mechanical properties of the composites were substantially enhanced. The maximum ultimate tensile strength for TPUR/OREC nanocomposites appeared at 2 wt % OREC loading. With increasing OREC contents, the tear strength of the composites increased significantly. (C) 2004 Wiley Periodicals, Inc.