A novel nanocomposite consists Of multiwall carbon nanotube (CNT)/waterborne polyurethane (WPU) nanocomposite has been Successfully prepared. Carbon nanotube was modified, to cornpatibilize with waterborne polyurethane via covalent bonding or ionic bonding. Thermal properties show that adding carbon nanotube enhanced the thermal stability by 26 degrees C (from 315 to 341 degrees C) when carbon nanotube content was 2.5 phr (part per hundred parts of resin). After the surface modification, carbon nanotube can be dispersed effectively, and improve the interfacial strength between it and waterborne polyurethane matrix. Consequently, the physical properties of nanocomposite are enhanced, especially in the covalent bonding system. Mechanical property tests show that adding multiwall carbon nanotubes improve the tensile properties very significantly (370% in tensile strength). SEM and TEM microphotographs prove that carbon nanotube can be effectively dispersed in waterborne polyurethane matrix. Rheological tests show that carbon nanotube can increase the melt viscosity and reduce the variation of processing viscosity. (c) 2005 Elsevier Ltd. All rights reserved.