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Abstract Many commodity plastics, such as thermoplastic polyurethanes (PUs), require reinforcement for use as commercial products. Cellulose nanocrystals (CNCs) offer a “green” and scalable approach to polymer reinforcement as they are exceptionally stiff, recyclable, and abundant. Unfortunately, achieving efficient CNC reinforcement of PUs with industrial melt processing techniques is difficult, mostly due to the incompatibility of the hydrophobic PU with hydrophilic CNCs, limiting their dispersion. Here, a hydrophilic PU is synthesized to achieve strong reinforcement in melt‐processed nanocomposite fibers using filter paper‐sourced CNCs. The melt‐spun fibers, exhibiting smooth surfaces even at high CNC loading (up to 25 wt%) indicating good CNC dispersion, are bench‐marked against solvent‐cast films—solvent processing is not scalable but disperses CNCs well and produces strong CNC reinforcement. Mechanical analysis shows the CNC addition stiffens both nanocomposite films and fibers. The stress and strain at break, however, are not significantly affected in films, whereas adding CNCs to fibers increases the stress‐at‐break while reducing the strain‐at‐break. Compared to earlier studies employing a hydrophobic (and stiffer) PU, CNC addition to a hydrophilic PU substantially increases the fiber stiffness and strength. This work therefore suggests that rendering thermoplastics more hydrophilic might pave the way for “greener” polymer composite products using CNCs.