Growth factors are potent signaling proteins for tissue engineering, but they are susceptible to loss of activity when exposed to solvents used for polymer processing. This work explores preservation of fibroblast growth factor-2 (FGF-2) activity in chitosan nanofibers using two-phase electrospinning via a compound coaxial needle and from a water-in-oil emulsion FGF-2 in aqueous poly(vinyl alcohol) is added on either the inside (A/O) or the outside (O/A) of an organic chitosan phase, using the compound needle. FGF-2 is further stabilized by complexation to heparin-based nanoparticles. The emulsion method does not result in detectable incorporation of FGF-2. The A/O fibers incorporate the highest amount of FGF-2. Nanoparticle-stabilized FGF-2 in A/O nanofibers is most active toward bone-marrow stromal cells. [GRAPHICS] .