Biocompatible conductive tough hydrogels represent a new class of advanced materials combining the properties of tough hydrogels and biocompatible conductors. Here, a simple method, to achieve a self-assembled tough elastomeric composite structure that is biocompatible, conductive, and with high flexibility, is reported. The hydrogel comprises polyether-based liner polyurethane (PU), poly(3,4-ethylenedioxythiophene) (PEDOT) doped with poly(4-styrenesulfonate) (PSS), and liquid crystal graphene oxide (LCGO). The polyurethane hybrid composite (PUHC) containing the PEDOT:PSS, LCGO, and PU has a higher electrical conductivity (10×), tensile modulus ( > 1.6×), and yield strength ( > 1.56×) compared to respective control samples. Furthermore, the PUHC is biocompatible and can support human neural stem cell (NSC) growth and differentiation to neurons and supporting neuroglia. Moreover, the stimulation of PUHC enhances NSC differentiation with enhanced neuritogenesis compared to unstimulated cultures. A model describing the synergistic effects of the PUHC components and their influence on the uniformity, biocompatibility, and electromechanical properties of the hydrogel is presented.