A series of non-toxic biodegradable and biocompatible polyurethanes bearing p-aminobenzoate moieties are presented. The introduction of this attractive motif was carried out by the synthesis of a novel isocyanate. These biodegradable polymers were chemically and physically characterized by several techniques and methods including bioassay and water uptake measurements. The molecular weight of the soft segment (poly-ε-caprolactone, PCL) and hard segment crystallinity dictated the mechanical behavior and water uptake. The behavior of short PCL-based polyurethanes was elastomeric, whilst increasing the molecular weight of the soft segment led to plastic polyurethanes. Water uptake was hindered for long PCL due to the crystallization of the soft segment within the polyurethane matrix. Furthermore, two different types of chain extender, hydrolyzable and non-hydrolyzable, were also evaluated: polyurethanes based on hydrolyzable chain extenders reached higher molecular weights, thus leading to a better performance than their unhydrolyzable counterparts. The good cell adhesion and cytotoxicity results demonstrated the cell viability of human osteoblasts on the surfaces of these non-toxic biodegradable polyurethanes.