Novel nanofibers from blends of polylactic-co-glycolic acid (PLGA) and chitosan have been produced through an emulsion electrospinning process. The spinning solution employed polyvinyl alcohol (PVA) as the emulsifier. PVA was extracted from the electropsun nanofibers, resulting in a final scaffold consisting of a blend of PLGA and chitosan. The fraction of chitosan in the final electrospun mat was adjusted from 0 to 33%. Analyses by scanning and transmission electron microscopy show uniform nanofibers with homogenous distribution of PLGA and chitosan in their cross section. Infrared spectroscopy verifies that electrospun mats contain both PLGA and chitosan. Moreover, contact angle measurements show that the electrospun PLGA/chitosan mats are more hydrophilic than electrospun mats of pure PLGA. Tensile strengths of 4.94 MPa and 4.21 MPa for PLGA/chitosan in dry and wet conditions respectively illustrate that the polyblend mats of PLGA/chitosan are strong enough for many biomedical applications. DSC and TEM analyses performed on PLGA/chitosan nanofibers show that a microphase separated system has been electrospun. Hence, the term “immiscible but compatible blends” can be applied to the situation. The biocompatibility of the PLGA/chitosan scaffold and its potential for biomedical applications was compared to PLGA nanofibers. NIH 3T3 cell lines and human Mesenchymal Stem Cells (hMSCs) were cultured onto both the scaffolds and the attachment, proliferation and differentiation (stem cells) of the cells were studied. NIH 3T3 Cell culture studies suggest that PLGA/chitosan nanofibers promote fibroblast attachment and proliferation compared to PLGA membranes. It can be assumed that the nanofibrous composite scaffold of PLGA/chitosan could be potentially used for skin tissue reconstruction. Stem cell studies revealed that both PLGA and PLGA/CH scaffolds supported viability and proliferation of human MSC with significantly higher rates on PLGA/CH nanofibers. Nonetheless, spontaneous differentiation of MSC on either PLGA or PLGA/Chitosan demonstrated a multilineage differentiation toward bone, adipose and nerve tissues. With the current work, higher rate of proliferation and viability of stem cells when cultured onto PLGA/CH compared to PLGA scaffold is a proof of concept for priority of emulsion electrospun scaffolds of PLGA/CH for tissue engineering applications. Moreover, seeding and directing the differentiation of MSC into bone and especially to neuron on the PLGA/CH scaffold presented here could be interesting.