Polyhydroxyalkanoates (PHAs) are excellent candidate biomaterials due to their exceptional biodegradability and biocompatibility. However, PHAs need to have tunable hydrophilicity, chemical functionalities, and appropriate hydrolytic stability to expand their therapeutic applications towards more advanced areas. In this Tutorial Review, we present the most recent progress in the synthetic strategies of PHA-based water soluble polymers, including the functionalisation of PHAs with polar functional groups and the block/graft copolymerization of PHAs with hydrophilic components in various polymeric architectures. These chemically modified water soluble PHAs have significant impact on materials engineering and show great value in the fulfilment of smart biomaterials in emerging areas. The applications of water soluble PHAs in controlled drug release, cancer therapy, DNA/siRNA delivery and tissue engineering in new aspects are discussed. In addition, water soluble PHA monomer production will be briefly introduced, with emphasis on its bio-significance in medical physiology and the therapeutic effect in the treatment of diseases.