Electrospinning of water-soluble polymers and retaining their mechanical strength and bioactivity remain challenging. Volatile organic solvent soluble polymers and their derivatives are preferred for fabricating electrospun nanofibers. We report the synthesis and characterization of 2-nitrobenzyl-gelatin (N-Gelatin)--a novel gelatin Schiff base derivative--and the resulting electrospun nanofiber matrices. The 2-nitrobenzyl group is a photoactivatable-caged compound and can be cleaved from the gelatin nanofiber matrices following UV exposure. Such hydrophobic modification allowed the fabrication of gelatin and blend nanofibers with poly(caprolactone) (PCL) having significantly improved tensile properties. Neat gelatin and their PCL blend nanofiber matrices showed a modulus of 9.08 ± 1.5 MPa and 27.61 ± 4.3 MPa, respectively while the modified gelatin and their blends showed 15.63 ± 2.8 MPa and 24.47 ± 8.7 MPa, respectively. The characteristic infrared spectroscopy band for gelatin Schiff base derivative at 1560 cm(-1) disappeared following exposure to UV light indicating the regeneration of free NH2 group and gelatin. These nanofiber matrices supported cell attachment and proliferation with a well spread morphology as evidenced through cell proliferation assay and microscopic techniques. Modified gelatin fiber matrices showed a 73% enhanced cell attachment and proliferation rate compared to pure gelatin. This polymer modification methodology may offer a promising way to fabricate electrospun nanofiber matrices using a variety of proteins and peptides without loss of bioactivity and mechanical strength.