Biodegradable and antimicrobial waterborne polyurethane dispersions (PUDs) and their casted solid films have recently emerged as important alternatives to their solvent-based and non-biodegradable counterparts for various applications due to their versatility, health, and environmental friendliness. The nanoscale morphology of the PUDs, dispersion stability, and the thermomechanical properties of the solid films obtained from the solvent cast process are strongly dependent on several important parameters, such as the preparation method, polyols, diisocyanates, solid content, chain extension, and temperature. The biodegradability, biocompatibility, antimicrobial properties and biomedical applications can be tailored based on the nature of the polyols, polarity, as well as structure and concentration of the internal surfactants (anionic or cationic). This review article provides an important quantitative experimental basis and structure evolution for the development and synthesis of biodegradable waterborne PUDs and their solid films, with prescribed macromolecular properties and new functions, with the aim of understanding the relationships between polymer structure, properties, and performance. The review article will also summarize the important variables that control the thermomechanical properties and biodegradation kinetics, as well as antimicrobial and biocompatibility behaviors of aqueous PUDs and their films, for certain industrial and biomedical applications.