Nerve tissue engineering is one of the most promising methods to restore nerve systems in human health care. Scaffold design has pivotal role in nerve tissue engineering. Polymer blending is one of the most effective methods for providing new, desirable biocomposites for tissue-engineering applications. Random and aligned PCL/gelatin biocomposite scaffolds were fabricated by varying the ratios of PCL and gelatin concentrations. Chemical and mechanical properties of PCL/gelatin nanofibrous scaffolds were measured by FTIR, porometry, contact angle and tensile measurements, while the in vitro biodegradability of the different nanofibrous scaffolds were evaluated too. PCL/gelatin 70:30 nanofiber was found to exhibit the most balanced properties to meet all the required specifications for nerve tissue and was used for in vitro culture of nerve stem cells (C17.2 cells). MTS assay and SEM results showed that the biocomposite of PCL/gelatin 70:30 nanofibrous scaffolds enhanced the nerve differentiation and proliferation compared to PCL nanofibrous scaffolds and acted as a positive cue to support neurite outgrowth. It was found that the direction of nerve cell elongation and neurite outgrowth on aligned nanofibrous scaffolds is parallel to the direction of fibers. PCL/gelatin 70:30 nanofibrous scaffolds proved to be a promising biomaterial suitable for nerve regeneration.