PURPOSE: A saturated aliphatic lactone-modified diol capable of providing a thermoplastic elastomer excellent in elastic recovery, low-temperature property, etc., obtained by reacting a specified polyalkylene ether diol with a 6W8C saturated aliphatic lactone.

CONSTITUTION: 1mol of a polyalkylene ether diol of formula I (wherein the repeating units are represented by formulas II and III, A is a group of formula IV, B is -CH2-CH2-CH2-CH2, l+m is about 6W140, and l/m is 10/90W100/0 (molar ratio) is reacted with at least one mol of a 6W8C saturated aliphatic lactone (e.g., -caprolactone). In this way, the purpose saturated aliphatic lactone-modified diol of formula V (wherein Y is a bivalent residue derived by removing an ester bond from a 6W8C saturated aliphatic lactone ring, and p+q≤1) is obtained. This modified diol is used as a component for soft segments of a thermoplastic elastomer.