Following the implantation of biodegradable vascular grafts, macrophages and fibroblasts are the major two cell types recruited to the host-biomaterial interface. In-vitro biocompatibility assessment usually involves one cell type, predominantly macrophages. In this study, macrophage and fibroblast mono- and co-cultures, in paracrine and juxtacrine settings, were used to evaluate a new biodegradable thermoplastic polyurethane (TPU) vascular graft. Expanded-polytetrafluoroethylene (ePTFE) grafts served as controls. Pro/anti-inflammatory gene expression of macrophages and cytokines was assessed in vitro and compared to those of an in vivo rat model. Host cell infiltration and the type of proliferated cells was further studied in vivo. TPU grafts revealed superior support in cell attachment, infiltration and proliferation compared with ePTFE grafts. Expression of pro-inflammatory TNF-a/IL-1a cytokines was significantly higher in ePTFE, whereas the level of IL-10 was higher in TPU. Initial high expression of pro-inflammatory CCR7 macrophages was noted in TPU, however there was a clear transition from CCR7 to anti-inflammatory CD163 expression in vitro and in vivo only in TPU, confirming superior cell-biomaterial response. The co-culture models, especially the paracrine model, revealed higher fidelity to the immunomodulatory/biocompatibility behavior of degradable TPU grafts in vivo. This study established an exciting approach developing a co-culture model as a tool for biocompatibility evaluation of degradable biomaterials.