Tissue engineering has been progressed rapidly due to availability of numerous technologies pertaining to scaffold's fabrication, cell culture techniques and improved understanding of cell-scaffold interactions, both in vitro and in vivo. Recently, biomaterials in the form of nanofibers have been introduced as tissue scaffolds after their successful fabrication by various methods such as electrospinning, self-assembly and phase separation. The scaffolds made of nanofiber biomaterials have widely used in various soft and hard tissue engineering applications. However, full replication (biomimicking) of natural extracellular matrix (ECM) in vitro is still a challengeable task to biomaterial scientists and engineers. In this paper, we summarized the various types of multi-functional biomaterials that have been used for the fabrication of nanofibrous scaffolds, their fabrication techniques, and their application in tissue engineering. On the other hand, the discovery of several types of stem cells and their response to nanofiber biomaterials further help in advancing tissue engineering research. Of particular interest, impact of stem cells behaviors such as isolation, adhesion, proliferation and differentiation onto nanofibrous scaffolds has been discussed in the context of tissue engineering and regeneration. Future prospects of nanofiber biomaterials in tissue engineering are also discussed. © 2011 American Scientific Publishers. All rights reserved.