Novel elastomeric nonporous polyurethane membranes were synthesised with differing hard segment contents for evaluation as possible islet encapsulation matrices. Physico-chemical properties of these membranes were reported earlier by authors and have been found suitable for immunoisolation. In the present study, membranes were evaluated for their in vitro biocompatibility. Membranes T1, T4, T5 and T6 did not show toxicity in direct cell contact study towards L929 fibroblasts. However, T2 and T3 were found cytotoxic and were excluded from further testing. NIH3T3 cells when exposed to leach out products of T4, T5 and T6 showed no cytotoxicity, while T1 decreased cellular viability as confirmed by MTT assay. T4 and T5 alone were seen to be compatible with mouse islets while T6 was incompatible to the mouse islets. Digital image analysis (DIA) studies showed intact morphology of islets cultured on the T4 and T5 with viability (88.4 and 91% respectively) comparable to islets on tissue culture polystyrene (TCPS) control. Islets on T4 and T5 also retained their functionality, as judged by insulin secretion in response to in vitro glucose challenge (16.0 mM). These studies point out the crucial role of surface free energy and hydrophilicity in deciding compatibility of polyurethane membranes with islets of Langerhans. Studies indicate that polyurethane membranes T4 and T5 could be potential candidates for islet immunoisolation.