Each year, more than 34 million musculoskeletal injuries or organ repair or replacement surgeries, and over 300,000 cases of peripheral nerve injuries resulting in upper extremity paralytic syndrome, are reported in the U.S. alone. Active duty military personnel are more prone to orthopedic injuries involving large extremity nerve injuries than civilians. The objective of the present proposal is to develop a novel structured nanofibrous biodegradable nerve graft system that present ECM protein, neurotrophic factor, and pre-seeded with bone marrow stromal cells in rotating bioreactors for enhancing peripheral nerve regeneration to the level comparable to autograft. In the second year of this project, we assessed the release kinetics of nerve growth factor and determined that PCL-PEG-BSA-NGF provided a favorable environment as observed by PC-12 neurite extension. As compared to static culture conditions, the dynamic culture in rotating bioreactors stimulated the proliferation and differentiation of BMSCs seeded on nerve grafts. Based on our current progress with the in vivo animal studies, we have observed that the autograft group yielded better results as compared to the nerve graft without any cells, growth factors, and proteins. While our in vitro data showed the efficacy of the nerve graft could be improved with various additives, we have not yet included these groups in the in vivo studies. As such, we expect the performance of the nerve graft to improve in the continuation of the following in vivo experiments for incorporating additives into the nerve grafts.