Palm oil-based polyurethane (POPU) foam has emerged as a sustainable alternative in various applications due to its biodegradability and renewable resources. This study investigated the incorporation of polypyrrole-modified montmorillonite nanoclay (PPy-MMT) into POPU foam and reported the effects of nanoclay loadings on structural, thermal stability and dielectric properties. PPy-MMT nanoclay was prepared via in-situ polymerisation between pyrrole monomer and MMT nanoclay. The nanoclay (ranging from 1 to 10 wt%) was dispersed into polyol components containing a blowing agent and surfactant before mixing with diisocyanate using the one-pot method. The x-ray diffraction (XRD) pattern showed that the POPU foam exhibited an intercalated/exfoliated structure when nanoclay was added, as evidenced by the transition of 2θ value to a lower angle (5.37° to 5.01°). Thermal gravimetric analysis (TGA) revealed that the thermal stability of the POPU/PPy-MMT was improved as the nanoclay loadings increased with increasing char yields from 9.83 to 21.95%. Dielectric properties measured across X-band region frequencies (8–12.4 GHz) had shown that adding 10 wt% nanoclay affected the dielectric constant and loss tangent by 13.6% and 344.4% increment, respectively. Overall, the findings highlighted that PPy-MMT nanoclay could improve the thermal stability and dielectric properties of POPU/PPy-MMT, opening up exciting possibilities for its use as sustainable insulation or electromagnetic interference shielding materials in diverse industrial applications.