Polyurethanes (PUs) microstructure and characteristics is strongly affected by microphase separation that arises from the thermodynamic immiscibility between the hard and soft segments. The extent of phase separation as well as the morphology and size of the separated phase governs their mechanical, electrical, thermal, and functional properties. This review: (1) provides an insight into how phase separation affects PU properties, (2) explains methods used to study PU phase separation. We review approaches from the simplest one, that is, the transparency measurement, to the more advanced methods including the spectroscopic techniques (infrared, nuclear magnetic resonance spectroscopies and X-ray scattering), rheological instruments ( rheometrics mechanical spectrometer), and thermal analyses (differential scanning calorimetry). We also discuss the theoretical calculations and the molecular modeling used to study PU phase separation.