The work demonstrates the effective utilization of hybrid Polyurethane - palladium doped zirconium oxide (Pd–ZrO2) as innovative carriers for corrosion protection coatings on steel materials. ZrO2 and Pd–ZrO2 nanoparticles were successfully synthesized using Photodeposition followed by the hydrothermal synthesis method. The synthesized nanoparticles were then incorporated into the polyurethane matrix and characterized using Fourier-transform infrared spectroscopy and scanning electron microscopy (SEM). The FTIR and SEM confirm the presence of ZrO2 and Pd–ZrO2 nanoparticles and their morphologies in polyurethane composites material. The thermogravimetric analysis (TGA) results indicated that the polyurethane matrix remained stable up to 250 °C. At 800 °C, >50% of residues are observed for Pd–ZrO2 – polyurethane in the TGA analysis, which confirms that the primer and nanoparticles addition enhances the thermal stability of the composite. The water contact angle measurement explains the hydrophobic behavior of nanocomposite modified coatings on a mild steel substrate. It indicates that Pd–ZrO2 and primer significantly increase the hydrophobicity of polyurethane. The major advantages of developing water-repellent or hydrophobic surfaces open up a world of possibilities for metals and alloys in terms of corrosion prevention. Electrochemical impedance spectroscopy (EIS) and a salt spray test were used to determine the anti-corrosion behavior of the prepared polymer nanocomposites. The polymer nanocomposite coatings have better anti-corrosive capabilities when compared to pure polyurethane. The corrosion protection efficiency increased from 76.63% to 97.57% upon incorporating 2 wt % of Pd–ZrO2 in the polyurethane matrix. The results confirmed that the modifications on the polyurethane enhanced the hydrophobicity and anti-corrosion properties of the polymer nanocomposite coatings.