Functionalization of azide moiety-containing polyurethane (PU) with alkyne-decorated poly(ethylene glycol) (PEG) was accomplished by Cu(I)-catalyzed Huisgen [3+2] dipolar cycloaddition click chemistry. The azide moiety containing poly(epsilon-caprolactone)diol was synthesized by the copolymerization of alpha-chloro-epsilon-caprolactone with epsilon-caprolactone using ring-opening polymerization and further used for PU synthesis. The PEG-functionalized PU was characterized using FT-IR, NMR, and GPC. The hydrophilicity of synthesized polymers was measured using contact angle and water content tests. In vitro cytotoxicity results showed that the amphiphilic PEG-functionalized PU exhibits good biocompatible behavior, which supports the importance of functionalized PU for biomedical applications.