Polyethylene glycol (PEG) modified benzoxazine–co-urethane (PEG-BZ–co-IPDI) hybrid copolymers were developed to integrate the structural rigidity of polybenzoxazine (PBZ), the toughness of polyurethane (PU), and the dynamic flexibility of polyethylene glycol (PEG). Benzoxazine monomers were synthesized using different types of diamines, viz., 4,4′-methylenebiscyclohexylamine (MBCH), 4,4′-diaminodiphenylmethane (DDM), and hexamethylenediamine (HMD), benzyl alcohol (BA) and paraformaldehyde, and subsequently copolymerized with polyethylene glycol (PEG) and isophorone diisocyanate (IPDI). DSC analysis ascertains that the polymerization of benzoxazine monomers synthesized occurs over the range of 229 to 244 °C. Thermogravimetric analysis showed high thermal stability, with 5% weight loss temperatures of 312–325 °C and char yields up to 56 wt% at 850 °C, depending on the nature of amine precursor. Nanoindentation tests indicated hardness values in the range of 4.3–5.3 GPa and elastic modulus up to 74 GPa, reflecting the existence of a strong cross-linked network in the copolymeric matrices. The introduction of PEG influences the chain mobility and promoted hydrogen-bonding interactions, imparting self-healing capability with ∼90% crack closure within 30 min at 100 °C. These results highlight the successful combination of PBZ, PU, and PEG in a single thermosetting system, establishing PEG modified benzoxazine–co- urethane (PEG-Bz-co-IPDI) hybrid matrices as a promising platform for advanced high-performance applications.