Electrospun nanofibers, as an innovative drug delivery system, provide selective, effective, and safe drug release. The present study aimed to fabricate nanofibers based on beta-cyclodextrin grafted chitosan (beta-CD-g-CS) macromol-ecules with incorporated drug via the blend electrospinning technique. The grafting of beta-CD onto chitosan (CS) was confirmed by FT-IR, 1H NMR, TGA, XRD, and EDX analysis. Indomethacin was encapsulated in the beta-CD-g-CS matrix as blend nanofibers using electrospinning in presence of polyvinyl alcohol (PVA). The SEM images revealed nanofibers with diameters at the nanoscale. The unique features of beta-CD-g-CS/PVA as drug delivery system were investigated using indomethacin as a model drug molecule. Controlled release of indomethacin from nanofibers was studied in PBS solution by measuring the absorbance by UV-Vis spectrophotometer. The drug release profile exhibited that the rate of drug release can be tailored by polymer type and changing the drug/polymer ratio. The physicomechanical properties of the developed nanofibers were analyzed by tensile strength and water contact angle. The results demonstrated that beta-CD-g-CS revealed enhanced wettability as well as favorable phys-icomechanical properties. In addition, the growth rate of the L929 cells on the CS and beta-CD-g-CS nanofibers was not significantly inhibited and even improved cell proliferation. These findings indicated that beta-CD-g-CS nanofibers could be appropriate as a smart drug delivery system for sustained release of indomethacin as an anti-inflammatory medicine in the wound healing and tissue engineering approaches in orthopedic applications.