Medical polyurethanes have shown good bio-stability and mechanical properties and have been used as coating for implantable medical devices. However, despite their excellent properties, they are relatively permeable to liquid water and water vapour which is a drawback for electronic implant encapsulation. In this study polyether polyurethanes with different soft segment molecular weights were modified by incorporating isopropyl myristate (IPM), as a hydrophobic modifying agent, and the effect of IPM on water resistant and biocompatibility of membranes were investigated. IPM changed the surface properties of the polyurethane film and reduced its surface energy. Polyurethane films were found to be stable with IPM concentrations of 1-5 wt% based upon their chemistry; however it leached out in BSA at higher concentrations. Though, low concentrations of IPM reduced both liquid water and water vapour permeability; at higher IPM content liquid permeability did not improved significantly. In general, the polyurethane materials showed much lower water permeability compared with currently used silicone packaging material for electronic implants. In addition, cytotoxicity assessment of IPM containing polyurethanes showed no evidence of cytotoxcity up to 5 wt% IPM. © 2010 by the authors.