Bioactive and reinforced poly(ε-caprolactone) (PCL) films were constructed by incorporation of cellulose derived reduced nanographene oxide (r-nGO) carbon nanodots. Two different microwave-assisted reduction routes in superheated water were utilized to obtain r-nGO and r-nGO-CA. For the latter, a green reducing agent caffeic acid (CA), was incorporated in the reduction process. The materials were extruded and compression molded to obtain proper dispersion of the carbon nanodots in the polymer matrix. FTIR results revealed favorable interactions between r-nGO-CA and PCL that improved the dispersion of r-nGO-CA. r-nGO, and r-nGO-CA endorsed PCL with several advantageous functionalities including improved storage modulus and creep resistance. The considerable increase in storage modulus demonstrated that the carbon nanodots had a significant reinforcing effect on PCL. The PCL films with r-nGO-CA were also evaluated for their osteobioactivity and cytocompatibility. Bioactivity was demonstrated by formation of hydroxyapatite (HA) minerals on the surface of r-nGO-CA loaded nanocomposites. At the same time, the good cytocompatibility of PCL was retained as illustrated by the good cell viability to MG63 osteoblast-like cells giving promise for bone tissue engineering applications.