Thermoplastic polyurethane (TPU) elastomers with biodegradable chain extenders were synthesized and tested for mechanical performance and biocompatibility. The design of the TPUs was based on structural modification of a mechanically appropriate aromatic isocyanate‐based TPU. As the aromatic isocyanate was substituted with a less toxic but also less “hard” aliphatic isocyanate, the chain extender plays an important role on the mechanical properties. Here, the terephthalate ester chain extender was found to work better than hydroxyl ethyl lactate in providing polymers with mechanical properties similar to commercial aromatic isocyanate‐based TPUs. The polymers were degraded in aqueous solutions at elevated temperatures and compared to polylactic acid (PLA) to partially simulate biodegradation. The lactate‐based TPUs degraded about twice as fast as PLA while the terephthalate‐based TPU degraded much more slowly. The latter material was processed by electrospinning to give a tubular graft approximately the size of a large rat blood vessel. Initial results from implantation of these TPUs into rats are promising and indicate that biodegradation occurs and is likely beneficial to cell proliferation. © 2011 Wiley Periodicals, Inc. J Polym Sci Part A: Polym Chem, 2011