Sustained release of proteins from aligned polymeric fibers holds great potential in tissue‐engineering applications. These protein–polymer composite fibers possess high surface‐area‐to‐volume ratios for cell attachment, and can provide biochemical and topographic cues to enhance tissue regeneration. Aligned biodegradable polymeric fibers that encapsulate human glial cell‐derived neurotrophic factor (GDNF, 0.13 wt %) were fabricated via electrospinning a copolymer of caprolactone and ethyl ethylene phosphate (PCLEEP) with GDNF. The protein was randomly dispersed throughout the polymer matrix in aggregate form, and released in a sustained manner for up to two months. The efficacy of these composite fibers was tested in a rat model for peripheral nerve‐injury treatment. Rats were divided into four groups, receiving either empty PCLEEP tubes (control); tubes with plain PCLEEP electrospun fibers aligned longitudinally (EF‐L) or circumferentially (EF‐C); or tubes with aligned GDNF‐PCLEEP fibers (EF‐L‐GDNF). After three months, bridging of a 15 mm critical defect gap by the regenerated nerve was observed in all the rats that received nerve conduits with electrospun fibers, as opposed to 50 % in the control group. Electrophysiological recovery was seen in 20 %, 33 %, and 44 % of the rats in the EF‐C, EF‐L, and EF‐L‐GDNF groups respectively, whilst none was observed in the controls. This study has demonstrated that, without further modification, plain electrospun fibers can help in peripheral nerve regeneration; however, the synergistic effect of an encapsulated growth factor facilitated a more significant recovery. This study also demonstrated the novel use of electrospinning to incorporate biochemical and topographical cues into a single implant for in vivo tissue‐engineering applications.