Nanofibrous semi-synthetic polymeric nanocomposite scaffolds were engineered by incorporating a maximum of 15 wt% biopolymeric gelatin nanoparticles (nGs) into the synthetic polymer poly(ε-caprolactone) (PCL) prior to electrospinning. The effect of nGs in altering the physico-chemical properties, cell material interaction and biodegradability of the scaffolds was evaluated. Experimental results showed that the inherent hydrophobicity of PCL scaffolds remained unaltered even after the incorporation of hydrophilic nGs. However, breakdown of the continuous nanofibers into lengths less than 7 µm occurred within four to eight weeks in the presence of nGs in contrast with the greater than two year time frame for the degradation of PCL fibers alone that is known from the literature. In terms of cell-material interaction, human mesenchymal stem cells (hMSCs) were found to attach and spread better and faster on PCL_nG scaffolds compared to PCL scaffolds. However, there was no difference in hMSC proliferation and differentiation into osteogenic lineage between the scaffolds. These results indicate that PCL_nG nanofibrous nanocomposite scaffolds are an improvement over PCL scaffolds for bone tissue engineering applications in that the PCL_nG scaffolds provide improved cell interaction and are able to degrade and resorb more efficiently.