Musculoskeletal tissue engineering aims at repairing and regenerating damaged tissues using biological tissue substitutes. One approach to achieve this aim is to develop osteoconductive scaffolds that facilitate the formation of functional bone tissue. We have fabricated nanoclay-enriched electrospun poly(ɛ-caprolactone) (PCL) scaffolds for osteogenic differentiation of human mesenchymal stem cells (hMSCs). A range of electrospun scaffolds is fabricated by varying the nanoclay concentrations within the PCL scaffolds. The addition of nanoclay decreases fiber diameter and increases surface roughness of electrospun fibers. The enrichment of PCL scaffold with nanoclay promotes in vitro biomineralization when subjected to simulated body fluid (SBF), indicating bioactive characteristics of the hybrid scaffolds. The degradation rate of PCL increases due to the addition of nanoclay. In addition, a significant increase in crystallization temperature of PCL is also observed due to enhanced surface interactions between PCL and nanoclay. The effect of nanoclay on the mechanical properties of electrospun fibers is also evaluated. The feasibility of using nanoclay-enriched PCL scaffolds for tissue engineering applications is investigated in vitro using hMSCs. The nanoclay-enriched electrospun PCL scaffolds support hMSCs adhesion and proliferation. The addition of nanoclay significantly enhances osteogenic differentiation of hMSCs on the electrospun scaffolds as evident by an increase in alkaline phosphates activity of hMSCs and higher deposition of mineralized extracellular matrix compared to PCL scaffolds. Given its unique bioactive characteristics, nanoclay-enriched PCL fibrous scaffold may be used for musculoskeletal tissue engineering.