In this study, we report the development of a nanofiber polycaprolactone scaffold that can act as a stem cell carrier to induce chondrogenesis and promote cartilage repair in vivo.Infrapatellar fat pads were obtained from sheep knee and the stem cells were isolated and characterized by flow cytometry. Defects were created in sheep knee, two defects received adipose tissue derived stem cells (ASCs)-polycaprolactone construct, second group received polycaprolactone (PCL), the third group was chosen as the ASCs group and the fourth group was control group. Morphological evaluation showed that defects treated with ASCs-scaffold constructs were completely filled with cartilage-like tissue, while other groups revealed the formation of a thin layer of cartilage-like tissue in the defects. Real-Time RT-PCR showed the increase in collagen type 2 mRNA levels, aggrecan and Sox9 in ASCs/PCL groups in comparison with the other groups.Immunofluorescence and toluidine blue staining results showed the protein expression of collagen type 2 and formation of round and polygonal clusters of chondrocytes in ASCS/PCL group.According to our results nanofiber polycaprolactone promoted the chondrogenesis of infrapatellar adipose tissue derived stem cells in vivo and could offer significant promise in the biological functionality of stem cell tissue engineering in clinical practice.