Issues associated with tissue transplantation and shortage of donors has always been a concern, whereas tissue engineering has provided the hopeful opportunities. The aim of this study was to investigate the chondrogenic differentiation potential of mesenchymal stem cells (MSCs) in the presence of embedded Dexamethasone into electrospun Poly(ethyleneoxide) nanofibers composited with Poly(-caprolactone) nanofibers. Electrospun-fabricated scaffolds were characterized by SEM, tensile, contact angle, release profile, MTT assay, and chonderogenic differentiation of stem cells. Results demonstrated Poly(-caprolactone) properties improved by composite with a Poly(ethyleneoxide). Overall, stem cells seeded on nanofibers content drug showed highest chondrogenic potential in comparison to the other groups.