A novel "nano in micro" architecture composite electrospun membrane has been fabricated with Poly (epsilon-caprolactone) (PCL). Nano sheets of montmorillonite (Mt) can act as drug cargoes in PCL electrospun membranes. The fiber morphology and diameter of PCL/Mt. electrospun membranes were tuned by optimization of various electrospun parameters. Higher concentration of Mt. loaded electrospun membranes exhibited improved crystallinity and hydrophilicity. The in vitro degradation studies of PCL/Mt. electrospun membranes explored a new scenario of degradation mechanism. PCL/40Mt membranes showed enhancement in human dermal fibroblast (HDFs) adhesion and proliferation. The vitamin B12 loaded Mt. nano-sheets incorporated in electrospun membranes exhibited extended release of the drugs over 15 days. Moreover, the pH responsive nature of PCL/ 40Mt electrospun membranes was also investigated. Gentamicin is the antibacterial drug loaded on PCL/40Mt membrane and showed bioactivity against E. coli for 15 days. The newly fabricated nano in micro architecture membranes can be used as potential material for tissue engineering and sustained drug delivery.