Mesenchymal stem cells and precursor cells are ideal candidates for tendon and ligament tissue engineering; however, for the stem cell-based approach to succeed, these cells would be required to proliferate and differentiate into tendon/ligament fibroblasts on the tissue engineering scaffold. Among the various fiber-based scaffolds that have been used in tendon/ligament tissue engineering, hybrid fibrous scaffolds comprising both microfibers and nanofibers have been recently shown to be particularly promising. With the nanofibrous coating presenting a biomimetic surface, the scaffolds can also potentially mimic the natural extracellular matrix in function by acting as a depot for sustained release of growth factors. In this study, we demonstrate that basic fibroblast growth factor (bFGF) could be successfully incorporated, randomly dispersed within blend-electrospun nanofibers and released in a bioactive form over 1 week. The released bioactive bFGF activated tyrosine phosphorylation signaling within seeded BMSCs. The bFGF-releasing nanofibrous scaffolds facilitated BMSC proliferation, upregulated gene expression of tendon/ligament-specific ECM proteins, increased production and deposition of collagen and tenascin-C, reduced multipotency of the BMSCs and induced tendon/ligament-like fibroblastic differentiation, indicating their potential in tendon/ligament tissue engineering applications.