A thermoplastic polyurethane (TPU) composite film containing hexadecyl-functionalized low-defect graphene nanoribbons (HD-GNRs) was produced by solution casting. The HD-GNRs were well distributed within the polyurethane matrix, leading to phase separation of the TPU. Nitrogen gas effective diffusivity of TPU was decreased by 3 orders of magnitude with only 0.5 wt % HD-GNRs. The incorporation of HD-GNRs also improved the mechanical properties of the composite films, as predicted by the phase separation and indicated by tensile tests and dynamic mechanical analyses. The improved properties of the composite film could lead to potential applications in food packaging and lightweight mobile gas storage containers.