The aim of this study was to develop new hydrophilic polyesters for tissue engineering applications. In our approach, poly(benzyloxymethyl glycolide-co-epsilon-caprolactone)s (pBHMG-CLs) were synthesized through melt copolymerization of E-caprolactone (CL) and benzyl-protected hydroxymethyl glycolide (BHMG). Deprotection of the polymers yielded copolymers with pendant hydroxyl groups, poly(hydroxymethylglycolide-co-epsilon-caprolactone) (pHMG-CL). The synthesized polymers were characterized by GPC, NMR, and DSC techniques. The resulting copolymers consisting of up to 10% of HMG monomer were semicrystalline with a melting temperature above body temperature. Water contact angle measurements of polymeric films showed that increasing HMG content resulted in higher surface hydrophilicity, as evidenced from a decrease in receding contact angle from 68 degrees for PCL to 40 degrees for 10% HMG-CL. Human mesenchymal stem cells showed good adherence onto pHMG-CL films as compared to the more hydrophobic PCL surfaces. The cells survived and were able to differentiate toward osteogenic lineage on pHMG-CL surfaces. This study shows that the aforementioned hydrophilic polymers are attractive candidates for the design of scaffolds for tissue engineering applications.