The present work deals with the preparation and characterization of hybrid electrospun fibres of thermoplastic polyurethane/polydimethylsiloxane (TPU-PDMS) and spherical nanohydroxyapatite (nHap) for bone tissue engineering applications. The fiber morphology with interconnected pore network, hydrophilicity, and mechanical properties of electrospun compatibilized blends were markedly influenced by the presence of nHap. The nHap based nanocomposites showed improvement in static and dynamical mechanical properties. Furthermore, the tensile strength was increased by 150% with the addition of 5 wt% of nHap in TPU-PDMS blend due to its superior morphology. The enhancement in the dispersion of nHap in TPU-PDMS blend matrix even at higher concentration was confirmed by FESEM, and Micro-CT analysis. Morphology of MTT (3-(4,5-dimethylthiazol-2-yl)-2,5-diphenyltetrazolium bromide) assay using human osteoblast-like cells (MG-63) proved all the scaffolds were non-cytotoxic. The TPU-PDMS scaffold with 5 wt% nHap showed the best performance regarding the cell viability, SBF bioactivity and hemocompatibility which makes its applicability in the fabrication of living bony constructs, especially for bone tissue interfaces.