Biocompatible and biodegradable nerve growth conduits (NGCs) provide a promising alternative to conventional nerve grafting for peripheral nerve regeneration. Incorporating nanoclay (NC) has been shown to increase the hydrophilicity and flexibility of polymeric scaffolds. In the present study, poly caprolactone-alginate (PCL-ALG) conduits with varying percentages of NC (0.1%, 0.2%, and 0.5%) were fabricated using the electrospinning technique. The conduit containing 0.5% NC showed a greater increase in elongation (33%) and porosity, reaching 95% with the lowest contact angle (10°). For in vitro, human olfactory ectomesenchymal stem cells (OE-MSCs) were used as a favorable choice for neuronal differentiation owing to the origin from the neural crest. The viability and proliferation of OE-MSCs were maintained after 5 days on scaffolds with 0.5% NC, as confirmed by the MTT assay, cell adhesion analysis, and live/dead staining. Furthermore, the impact of 0.5% PCL-ALG-NC on the paracrine activity of OE-MSCs was studied for a period of 7 days. Our results indicated that human OE-MSCs, when cocultured with PC12 cells on NGC, have the capability to release nerve growth factor levels of up to 1392.83 pg/mL. In summary, the electrospun PCL-ALG conduit containing an optimal NC dosage (0.5%) and seeded with human OE-MSCs shows promising outcomes as NGC scaffold for peripheral nerve regeneration.