Polycaprolactone (PCL) is a resorbable polymer used extensively in bone tissue engineering owing to good structural properties and processability. Strontium substituted bioactive glass (SrBG) has the ability to promote osteogenesis and may be incorporated into scaffolds intended for bone repair. Here we describe for the first time, the development of a PCL-SrBG composite scaffold incorporating 10% (weight) of SrBG particles into PCL bulk, produced by the technique of melt-electrospinning. We show that we are able to reproducibly manufacture composite scaffolds with an interconnected porous structure and, furthermore, these scaffolds were demonstrated to be non-cytotoxic in vitro. Ions present in the SrBG component were shown to dissolve into cell culture media and promoted precipitation of a calcium phosphate layer on the scaffold surface which in turn led to noticeably enhanced alkaline phosphatase activity in MC3T3-E1 cells compared to PLC-only scaffolds. These results suggest that melt-electrospun PCL-SrBG composite scaffolds show potential to become effective bone graft substitutes.