Electrospun nanofibers have attracted much attention in recent years as scaffolds for improved osteo-regeneration. In the present study, polycaprolactone/poly(1,4-butylene adipate-copolycaprolactam) blends were electrospun as potential biodegradable scaffolds for bone tissue engineering. The morphology of the scaffold was observed to be bead-free nanofibers with average diameter of about 400 nm by scanning electron microscopy. The semi crystalline nature, molecular interactions among the polymers, lowering of thermal degradation temperature and improved wetability of the blends compared to polycaprolactone were confirmed by wide angle X-ray diffraction analysis, Fourier transform infrared spectroscopy, simultaneous thermal analysis and contact angle measurements. Enzymatic in vitro degradation study using lipase enzyme showed the electrospun blend fiber mat to be biodegradable with degradation rate higher than that of polycaprolactone. Direct contact in vitro cytotoxicity test and MTT reduction calorimetric assay using mouse fibroblast cells indicated the non-cytotoxic reactivity and cell viability of the scaffold. Human osteoblast cell culture studies of the polymer blend fibers showed improved cellular response with good adhesion and proliferation, demonstrating the viability of the electrospun blend mat for bone tissue engineering applications. © 2011 American Scientific Publishers. All rights reserved.