In order to help reduce the agglomeration of TiO2 nanoparticles in polyurethane coatings while enhancing their photoactivity and mechanical/physical properties, this work examined encapsulating TiO2 nanoparticles in a thin layer of SiO2, prior to their nanocomposite polymerization. By applying a Stöber process, varying thicknesses of SiO2 were successfully coated onto the surface of anatase and rutile TiO2 nanoparticles. The methylene blue results showed that different loadings of SiO2 onto the TiO2 surface significantly influenced their photocatalytic activity. When the loading weight of SiO2 was lower than 3.25 wt%, the photocatalytic activity was enhanced, while with higher loadings, it gave lower photocatalytic activity. When the rutile phase TiO2 surface was fully covered with SiO2, an enhanced photocatalytic activity was observed. When these silica coated nanoparticles were applied in polyurethane coatings, increasing the amount of SiO2 on the titania surface increased the coatings contact angle from 75° to 87° for anatase phase and 70°-78° for rutile phase. The Young's modulus was also increased from 1.06 GPa to 2.77 GMPa for anatase phase and 1.06-2.17 GPa for rutile phase, attributed to the silica layer giving better integration. The thermal conductivity of the polyurethane coatings was also successfully decreased by encapsulating SiO2 on the titania surface for next generation high performance coatings.