The waterborne polyurethane dispersions (WPUDs) have substituted solvent borne systems due to strong environmental concerns. In this study, a series of WPUDs synthesized to evaluate the impact of size of soft segment (Polyethylene glycol; PEG) on their properties. The Fourier Transform Infrared spectroscopy (FTIR), dynamic light scattering, rheometer and gravimetric determination of total solid content were used to assess the physicochemical properties of dispersions. The appearance of characteristic NH and CO urethane bands in FTIR spectra demonstrated the proposed synthesis of WPUDs. An increase in the molecular weight of hydrophilic soft segment ensued a decrease in average particle size of dispersions along with a parallel increase in viscosity and total solid content of dispersions. The textile testing and SEM analyses supported the finishing of cotton fabric with slight improvement in tear strength. However, no significant correlation was observed between tear strength and size of soft segment. Furthermore, the dispersions showed antimicrobial activity against gram −ve and +ve bacteria though the effect was diminishing with increase in the molecular weight of soft segment.