AbstractFe3O4 magnetic nanoparticles (MNPs) are subsequently modified with (3‐aminopropyl) triethoxysilane (APTES) and octadecyl isocyanate (OD) to yield MNPs‐g‐OD. Fourier‐transform infrared (FTIR), X‐ray diffraction (XRD), thermogravimetric analysis (TGA), and vibrating sample magnetometer (VSM) verified successful modification of MNPs with three different ratios of OD. Shape memory polyurethane (SMPU) nanocomposites containing 4 wt% of the neat, APTES‐grafted, and OD‐grafted MNPs are prepared through solution casting, where a strong correlation is achieved between the microstructure, crystallinity, thermal, and mechanical properties of the nanocomposites. Phase mixing degree of the soft and hard phases is increased by hydrogen bonding between the OD and polyurethane (PU) chains, causing to decrease of crystallization ability of PU chains. Field‐emission scanning electron microscopy (FE‐SEM) images show that high dispersion of MNPs‐g‐OD reduces the number and size of their aggregation sites in the PU matrix. The nanocomposites show high Young's modulus, because of increasing hydrogen bonding index of carbonyl groups with incorporation of MNPs‐g‐OD into the PU matrix. The nanocomposites show lower Young's modulus with increasing the degree of crystallinity. Shape memory studies indicated that all the samples have considerable shape memory abilities at 50 °C and room temperature. However, shape fixity ratios show a close dependence on the degree of crystallinity at room temperature.