A method of making a silyl-terminated polyurethane in an aqueous dispersion aqueous silyl-terminated polyurethane dispersions are described. In one embodiment, the polyurethane comprises a) urethane moieties derived from the reaction of a (i) a diol; (ii) a neutralized anionic water solubilizing compound; and iii) a diisocyanate. The polyurethane also comprises b) silyl terminal groups derived from an alkoxy silane compound having the formula (R3O)3SiR4—Z, wherein R3 is independently hydrogen or a C1-C4 alkyl; R4 is a divalent group selected from alkylene, alkylarylene, oxyalkylene; and Z is selected from the group consisting of —OH, —SH, —NR, —NH2, wherein R is an aromatic or aliphatic cyclic group. The polyurethane also comprises c) urea moieties derived from the reaction of an isocyanate terminated prepolymer and a difunctional hydrazine or hydrazide compound.