Despite the advances in tissue engineering approaches, reconstruction of long segmental peripheral nerve defects remains unsatisfactory. Although autologous grafts with proper fascicular complementation have shown meaningful functional recovery according to the Medical Research Council Classification (MRCC), the lack of donor nerve for such larger defect sizes (>30 mm) has been a serious clinical issue. Further clinical use of hollow nerve conduits is limited to bridging smaller segmental defects of denuded nerve ends (<30 mm). Recently, bioinspired multichannel nerve guidance conduits (NGCs) gained attention as autograft substitutes as they mimic the fascicular connective tissue microarchitecture in promoting aligned axonal outgrowth with desirable innervation for complete sensory and motor function restoration. This review outlines the hierarchical organization of nerve bundles and their significance in the sensory and motor functions of peripheral nerves. This review also emphasizes the major challenges in addressing the longer nerve defects with the role of fascicular arrangement in the multichannel nerve guidance conduits and the need for fascicular matching to accomplish complete functional restoration, especially in treating long segmental nerve defects. Further, currently available fabrication strategies in developing multichannel nerve conduits and their inconsistency in existing preclinical outcomes captured in this review would seed a new process in designing an ideal larger nerve conduit for peripheral nerve repair.