Novel EPDM (ethylenepropylenediene monomer) and polybutadiene polyols can be synthesized by a two-step process of controlled hydroformylation and then reduction of the formyl groups to place a desired amount of pendant alcohol groups along the polymer chain. The degree of functionalization can be controlled by measuring gas uptake from a calibrated reservoir during hydroformylation. Hydroformylation can be performed in solution or under simulated melt-phase conditions using either HRh(CO)(PPh(3))(3) of Rh(acac)(CO)(2) as catalysts. Reduction of the polyaldehyde by NaBH4 generates the polymeric alcohol without further reaction of the remaining double bonds. Polymer functionalization and further modifications were followed by H-1-NMR and FTIR. These unique hydrophobic polyols can be reacted further to produce other polymer systems. As an example, urethanes have been made with these polyols by reaction with diisocyanates.