Polyurethanes (PUs) are widely used due to their durability, flexibility, and biocompatibility. PU hydrogels have been used in biomedical applications, tissue engineering, synthetic extracellular matrices, and drug delivery. In this research, polyurethane-based hydrogels were prepared using polyethylene glycol (PEG) and a novel lactose monomer that could be prepared in high yields. The swelling of the hydrogels was driven by the hydrophilicity of the lactose units rather than the PEG. Subsequent sulfation of the lactose rings resulted in high-swelling polyelectrolyte hydrogels. The effects of PEG molecular weight, degree of crosslinking in the hydrogel, and sulfating the carbohydrate rings on the swelling of the hydrogles were studied. The sulfated hydrogels showed excellent swelling ratios (300–2500%) despite having a minimal average degree of sulfation per lactose ring (1.03). These sugar functionalized polyurethanes successfully combine the tunability of PUs with the swelling properties of hydrogels. We expect these polymers have potential applications in enzyme stabilization and as bioactive glycopolymers.