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This study aims to develop, for the first time, thermoplastic polyurethane (TPU) microcellular composite fibers via an extrusion foaming process using supercritical CO2 as a blowing agent. Results showed that by employing organically modified montmorillonite clay nanoparticles (CloisiteTR 20A) in the matrix at an optimal concentration of about 1.0 wt%, the nucleation rate of foaming was enhanced, thus resulting in the formation of small bubbles in the extruded fibers. Cell sizes as low as several microns or even submicron and fiber diameters less than 30 μm were obtained in the present study. When processed with 0.5 wt% of a slip agent (Oleamide TR121), the extruded TPU fiber foams exhibited fewer cells near the fiber surface. Mechanical studies showed that the tensile modulus per mass based on the initial slope of the stress–strain curve remained almost the same for both unstretched and stretched fibers with or without foaming. However, the yield stress and the maximum tensile load at an equal mass basis were lower for fibers with foaming. POLYM. ENG. SCI., 53:2360–2369, 2013. © 2013 Society of Plastics Engineers