Polyhydroxyurethane were prepared from polyurethane prepolymers by end capping with glycerol carbonate (GC) and chain extension with an amine. The GC-based polyurethane (GPU) shows excellent mechanical properties together with superior self-healing properties compared with conventional polyurethane (CPU). The significant improvement in mechanical properties was driven by enhanced hydrogen bonding and the excellent self-healing was attributed to the exchange reaction of the β-hydroxy unit of GPU. The self-healing efficiencies of GPU and CPU were approximately 92% and 42% at 110 °C, respectively. The characteristics of GPU were also studied by rheological measurements. GPU showed not only a negative normal stress difference (N1) but also a crossover of storage (G′) and loss (G″) moduli. It is postulated that the exchange reactions of GPU in melts induce a negative N1 as well as self-healing of the GPU, implying desirable melt processing stability with minimal die swell.