Poly(acryloyl chloride) (PACl) was employed to enhance the surface of multi-walled carbon nanotubes (MWCNTs). MWCNTs were first acid treated to generate hydroxyl groups on the surface, which was reacted with PACl to obtain an encapsulation. The numerous acryloyl chloride groups on the out layer were esterified with a proper amount of ethylene glycol (EG). Subsequently, 4,4′-methylenebis (phenylisocyanate) (MDI) and 1,4-butanediol (BDO) were introduced into the system, and a polyurethane (PU) layer was formed in situ. The formation of PU layers on MWCNTs was confirmed by Fourier transform infrared spectrometer (FTIR) and X-ray photoelectron spectroscope (XPS). The morphology of encapsulated MWCNTs was observed by transmission electron microscope (TEM) and scanning electron microscope (SEM). Thermo gravimetric analysis (TGA) showed the grafted polymer fraction was up to 90%. On introducing the modified MWCNTs into a PU matrix, an increase in tensile strength by 60.6% and improvement in modulus by 6.3% over neat PU was observed. © 2008 Wiley Periodicals, Inc. J Polym Sci Part A: Polym Chem 46: 4857–4865, 2008