The convenient exploitation of biodegradable and biocompatible PCL/PVA polymers in the field of tissue engineering is limited by their inferior mechanical, thermal and barrier properties. The present study thereby aspires towards supplementing their mechanical properties by exploiting the merits of nanofiber reinforcement and state of the art electrospinning processes. These processes generate nanofibers that can be employed as reinforcing fillers in the synthesis of biocomposites possessing high strength and toughness towards tissue engineering applications. We have demonstrated a green, inexpensive, low energy consuming and one-step technique of steam explosion with lemon juice using an in-house conceptualized autoclave for the disintegration of cellulose micro/nanofibrils from lignocellulosic material. An enhancement in the crystallinity of the native cellulose from 43 to 63% was confirmed by XRD characterization using a peak deconvolution method, and FTIR spectra validated the grafting of the carboxylic groups in citric acid with cellulose fibrils providing the surface modification and superior interaction with a hydrophobic polymer matrix. Thereafter, PCL/PVA polymers were nanoengineered by electrospinning along with the steam explosion generated cellulose micro/nanofibrils to yield PCL/PVA nanoencapsulated cellulose nanofibrils of diameter 40–70 nm, owing to the diffusion of the polymeric material into the porous network of the cellulose fibrils. The resulting fibrils with enhanced surface area, reduced surface roughness and reduced pore size have also displayed antimicrobial properties against Staphylococcus aureus and Escherichia coli bacterial strains, and thus can be used as reinforcing nanoadditives in known biocompatible polymers to give rise to novel biocomposites with enhanced mechanical properties.