In this study short-term in vitro and in vivo biocompatibility apects of a biodegradable polyurethane (PU) foam were evaluated. The PU consists of hard urethane segments and amorphous soft segments based on a copolyester of dl-lactide and epsilon-caprolactone. The urethane segments are of uniform length and synthesized with 1,4-butanediisocyanate. The foam has good mechanical properties and will be used for tissue regeneration applications. Degradation tests were carried out in a buffer solution for twelve weeks. Cytotoxicity was determined using extract and direct contact test methods with incubation periods varying form 24 to 72 h. The foam was implanted subcutaneously for one, four and twelve weeks and the tissue response to the material was histologically evaluated. In vitro, the mass loss was 3.4% after twelve weeks. In the cytotoxicity tests the PU caused no abnormal growth behaviour, nor morphological changes or inhibition in metabolic activity. The in vivo studies showed no toxic tissue response to the PU. Connective tissue ingrowth, accompanied by vascular ingrowth was complete at twelve weeks. In vivo degradation had started within four to twelve weeks. In conclusion, the PU shows a good in vitro and in vivo biocompatibility in these short-term experiments.