Electrospinning is a simple and versatile technique of producing polymeric fibers ranging from submicron to micron in diameter. Incorporation of bioactive agents into the fibers could make a biofunctional tissue engineering scaffold. In this study, we investigated the feasibility of encapsulating human beta-nerve growth factor (NGF), which was stabilized in a carrier protein, bovine serum albumin (BSA) in a copolymer of epsilon-caprolactone and ethyl ethylene phosphate (PCLEEP) by electrospinning. Partially aligned protein encapsulated fibers were obtained and the protein was found to be randomly dispersed throughout the electrospun fibrous mesh in aggregate form. A sustained release of NGF via diffusion process was obtained for at least 3 months. PC12 neurite outgrowth assay confirmed that the bioactivity of electrospun NGF was retained, at least partially, throughout the period of sustained release, thus clearly demonstrating the feasibility of encapsulating proteins via electrospinning to produce biofunctional tissue scaffolds.