Pioneering work on polyurethane polymers was done by Otto Bayer and his coworkers in 1937 at the IG Farben laboratories in Leverkusen, Germany. They recognized that the use of the polyaddition principle to produce polyurethanes from liquid diisocyanates and liquid polyether or polyester diols seemed to point to special opportunities, especially compared to existing plastics that were made by olefin polymerization or polycondensation. The new monomer combination also circumvented existing patents held by Wallace Carothers on polyesters. Initially, work focused on the production of flexible fibers and foams. With development limited by World War II (when PUs were applied on a limited scale as aircraft coatings), it was not until 1952 that polyisocyanates became commercially available. Commercial production of flexible polyurethane foam began in 1954, based on toluene diisocyanate (TDI) and polyester polyols. The invention of these foams (initially called imitation Swiss cheese by the inventors) was thanks to the accidental introduction of water into the reaction mixture.

These materials were also used to produce rigid foams, gum rubber, and elastomers. The linear fibers were produced from hexamethylene diisocyanate (HDI) and 1,4-butanediol (BDO). The first commercially available polyether polyol, poly(tetramethylene ether) glycol), was introduced by DuPont in 1956 by polymerizing tetrahydrofuran. BASF and Dow Chemical introduced less expensive polyalkylene glycols the following year, 1957. These polyether polyols offered technical and commercial advantages, such as low cost, ease of handling, and better hydrolytic stability; and quickly supplanted polyester polyols in the manufacture of polyurethane products. Another early pioneer in PUs was the Mobay corporation. In 1960 more than 45,000 tons of flexible polyurethane foams were produced. As the decade progressed, the availability of chlorofluoroalkane blowing agents, inexpensive polyether polyols, and methylene diphenyl diisocyanate (MDI) heralded the development and use of rigid polyurethane foams as high-performance insulation materials. Rigid foams based on polymeric MDI (PMDI) offered better thermal protection, stability and combustion characteristics than those based on TDI. In 1967, rigid urethane-modified polyisocyanurate foams were introduced, offering even better thermal stability and flammability resistance for low-density insulation products.

Also during the 1960s, automotive interior safety components such as instrument and door panels were produced by filling thermoplastic liners with semi-rigid foam. In 1969, Bayer AG exhibited an all-plastic car in Dusseldorf, Germany. The parts for this car were made using a new process called RIM, reaction injection molding. RIM technology uses high-pressure impingement of liquid components followed by rapid flow of the reaction mix into a mold cavity. Large parts such as car dashboards and body panels can be molded in this way. Polyurethane RIM evolved into several different products and processes. The use of diamine chain extenders and trimerization technology provided poly(urethane urea), poly(urethane isocyanurate) and RIM polyurea. The addition of fillers such as ground glass, mica, and processed mineral fibers resulted in RRIM, Reinforced RIM, which provided improvements in flexural modulus (stiffness) and thermal stability. This technology enabled the production of the first plastic-bodied automobile in the United States, the Pontiac Fiero, in 1983. Further improvements in flex modulus were obtained by incorporating pre-positioned glass plates into the cavity of the RIM mold, also known as SRIM. , or structural RIM. In the early 1980s, water-blown microcellular flexible foam was used to mold gaskets for panels and radial seal air filters in the automotive industry. Since then, rising energy prices and the desire to eliminate PVC plastisol from automotive applications have greatly increased market share. The more expensive raw materials are offset by a significant decrease in part weight and, in some cases, the elimination of end caps and metal filter housings.

Highly filled polyurethane elastomers and more recently unfilled polyurethane foams are now used in high temperature oil filter applications. Polyurethane foam (including foam rubber) is often made by adding small amounts of volatile materials, so-called blowing agents, to the reaction mixture. These simple volatile chemicals produce important performance characteristics, primarily thermal insulation. In the early 1990s, due to their impact on ozone depletion, the Montreal Protocol significantly reduced the use of many chlorine-containing blowing agents, such as trichlorofluoromethane (CFC-11). Other haloalkanes, such as the hydrochlorofluorocarbon 1,1-dichloro-1-fluoroethane (HCFC-141b), were used as interim replacements until phased out under the IPPC Greenhouse Gas Directive in 1994 and by the Volatile Organic Compounds Directive ( VOC). from the EU in 1997 (See: Haloalkanes). In the late 1990s, the use of blowing agents such as carbon dioxide, pentane, 1,1,1,2-tetrafluoroethane (HFC-134a), and 1,1,1,3,3-pentafluoropropane (HFC-245fa ) became more widespread in North America and the EU, although chlorinated blowing agents continued to be used in many developing countries.

Based on existing polyurethane spray coating technology and polyetheramine chemistry, extensive development of two-component polyurea spray elastomers took place in the 1990s. Their rapid reactivity and relative insensitivity to moisture make them useful coatings for large surface projects such as secondary containment, sewer and tunnel linings, and tank linings. Excellent adhesion to concrete and steel is obtained with the proper primer and surface treatment. During the same period, new two-component polyurethane and polyurethane-polyurea hybrid elastomer technology was used to enter the market for spray-in-place cargo bed linings. This technique for lining truck beds and other cargo compartments creates a durable, abrasion-resistant composite with the metal substrate and eliminates corrosion and embrittlement associated with thermoplastic bed liners. The use of polyols derived from vegetable oils to make polyurethane products began to gain attention starting in 2004, partly due to rising petrochemical raw material costs and partly due to a greater public desire for green products that are not they harm the environment. One of the most vocal proponents of these polyurethanes made from natural oil polyols is Ford Motor Company.