In this work, PDMS modified PU was synthesized using two-stage method to improve water resistance and weather resistance in the waterborne polyurethane was investigated. It was found that the absorbed water content decreased with increasing PDMS content in polyurethane. It was also found that PDMS modified polyurethane had better solvent resistance than unmodified polyurethane. The structure incorporated the PDMS into the soft segment of polyurethane chains was confirmed by FTIR. The phase separation increased by increasing PDMS content and was confirmed by DSC. The particle size of the dispersions increased and tensile strength and hardness decreased with the increase of PDMS content. Furthermore, with the improved water resistance and elongation, it was hoped that the modified polyurethane could be used as wood coatings superior to the solvent-borne systems.