This study focused on the design of novel mechanically tough, biocompatible, osteoconductive and biodegradable scaffolds based on sunflower oil modified hyperbranched polyurethane (HBPU)/functionalized multi-walled carbon nanotube (f-MWCNT) nanocomposites (NCs), and the response of an animal model on their post-implantation. The NC was prepared by an in situ polymerization technique with different wt% of f-MWCNTs. The tensile strength of the NCs was enhanced to 36.98-47.6 MPa from 23.93 MPa (HBPU) and toughness from 12 767 to 18 427-19 440 due to the addition and efficient dispersion of the f-MWCNTs in the HBPU matrix. The post-60 days in vitro biodegraded NC retained sufficient strength (39 ± 1.65 MPa). The increase in wt% of f-MWCNTs had a significant effect on tailoring the physico-mechanical properties of the polymer. The hematological, histological and immunological indices of toxicity suggested the safety potential of the prepared systems within the tested animal model. Moreover, the cytokines (viz. IL-6 and TNF-α) detection, MTT assay and anti-hemolytic assay boosted the non-toxic behavior of the systems. The NC with interconnected pores size (200-330 μm) showed better proliferation and adherence of osteoblast (MG63) cells compared to the HBPU and the results were comparable with the control. Thus the findings confirmed the non-toxicity of f-MWCNTs in association with the polymer and thereby endorsed the NC as a potential biomimetic scaffold for bone tissue engineering. © 2013 The Royal Society of Chemistry.