In this paper, we develop high aspect ratio nanofibrils from a polycaprolactone-based thermoplastic polyurethane (TPU) and evaluate their performance as a toughening agent. Poly(methyl methacrylate) (PMMA) was chosen as the matrix material because of its inherent brittleness and low resistance to sudden shocks and impact. We show that the addition of as little as 3 wt % of TPU nanofibrils with an average diameter of ∼98 nm and very high aspect ratio can significantly improve both the tensile toughness (∼212%) and impact strength (∼40%) of the chosen matrix (i.e., PMMA) without compromising its original strength, stiffness, and transparency. We compare the performance of TPU nanofibrils with TPU spherical particles─the form TPU typically manifests into when melt-mixed with an immiscible polymer. Our findings highlight that the structure of TPU plays a crucial role in determining the critical concentration of TPU needed for the brittle-ductile transition of the matrix. We also provide new and valuable insights into the unique interfacial interaction (i.e., formation of fibrillar bridges) observed between the PMMA matrix and TPU. We also show that the inclusion of 3 wt % of TPU nanofibrils can notably enhance resistance to creep deformation, even at temperatures close to the glass transition temperature of the matrix. Finally, we evaluate recyclability and demonstrate that the composite containing 3 wt % of TPU nanofibrils can be mechanically recycled without losing any properties. The proposed TPU nanofibrils can withstand repeated reprocessing at temperatures up to 190 °C due to their very high melting point and thermal stability. This presents the opportunity for them to be utilized not just with amorphous PMMA, but also with a range of other materials that can be processed at or below this temperature to remarkably improve their toughness without sacrificing strength and stiffness.