Bagasse is a waste product of sugar extraction from sugar-cane with approximately 30% cellulose content. Cellulose was successfully extracted from sugar-cane bagasse using a modified mercerization-bleaching approach with a 40% yield. Extracted cellulose was converted to cellulose acetate for enhanced electrospinnability and blended with poly-L-Lactide or polydioxanone before solution electrospinning. Physico-chemical evaluation of the electrospun mats showed variable miscibility of blends. In vitro cell studies with L929 mouse fibroblast cells was quite conclusive as regards the biocompatibility of the blended mats with proliferative behavior of cells, extracellular matrix deposition and characteristic features of healthy cellular response. MTT assay indicated that the cellulose blended mats induced higher cell densities than the controls. Cellulose content influenced parameters such as fiber diameter, porosity and cell-matrix interaction of mats impacting on cell growth and behavior. Preliminary assessment of biomineralization potential of the mats by SEM showed nanohydroxyapatite deposits on the electrospun fibers.