ABSTRACTProcessing graphene and graphene polymer nanocomposites in an aqueous medium has always been a big challenge due to the hydrophobic nature of graphene (or reduced graphene oxide) nanosheets. In this work, a waterborne latex of polyurethane has been used both as the matrix material for embedding the graphene nanosheets and as a unique stabilizer to help produce an up to 5 wt% graphene/PU nanocomposites. The graphene oxide/polyurethane latex aqueous suspension is reduced in-situ using hydrazine, without any trace of aggregation/agglomeration upon completion of the reduction process, which would otherwise have occurred severely were PU not present. A highly aligned nanostructure is produced when graphene content is increased beyond 2 wt%, resulting in a remarkable improvement in electrical and mechanical properties of the nanocomposite. The exceptionally low electrical percolation threshold of 0.078%, as well as 21-fold and 14 fold increases in tensile modulus and strength, respectively, have been attained thanks to the alignment of graphene nanosheets in the polymeric matrix.