Poly(lactide-co-glycolide) (PLGA) has been widely investigated for fabricating electrospun fibers due to their biocompatibility, paired with the capacity for encapsulating different drugs. However, such scaffolds shrink and distort upon contact with biological media, which is undesired for local drug application. To address this issue, we fabricated composite fiber scaffolds with the combination of PLGA and poly(ethylene glycol) (PEG). Scaffold shrinkage could successfully be overcome, however, the release kinetics of the encapsulated drug was strongly dependent on the amount of PEG. The addition of 5% PEG resulted in slower drug release due to a significant increase in fiber diameters. In contrast, the drug release rate was accelerated for fibers containing 10% PEG due to the water-soluble nature of the polymer. Furthermore, co-delivery of two different drugs, the small molecule acyclovir and the model protein bovine serum albumin was realized by two different approaches, coaxial electrospinning and immobilization of the drugs on the surface of the fibers, and drug release was found to be strongly dependent on the loading procedure. Based on our findings, key factors for understanding and controlling physicochemical properties of PLGA/PEG composite fibers as well as tuning drug release could be identified, providing an essential basis for rational design of electrospun fiber-based drug carriers.