Peripheral nerve injuries can result in lifelong disability. Primary coaptation is the treatment of choice when the gap between transected nerve ends is short. Long nerve gaps seen in more complex injuries often require autologous nerve grafts or nerve conduits implemented into the repair. Nerve grafts, however, cause morbidity and functional loss at donor sites, which are limited in number. Nerve conduits, in turn, lack an internal scaffold to support and guide axonal regeneration, resulting in decreased efficacy over longer nerve gap lengths. By comparison, peptide amphiphiles (PAs) are molecules that can self-assemble into nanofibers, which can be aligned to mimic the native architecture of peripheral nerve. As such, they represent a potential substrate for use in a bioengineered nerve graft substitute. To examine this, we cultured Schwann cells with bioactive PAs (RGDS-PA, IKVAV-PA) to determine their ability to attach to and proliferate within the biomaterial. Next, we devised a PA construct for use in a peripheral nerve critical sized defect model. Rat sciatic nerve defects were created and reconstructed with autologous nerve, PLGA conduits filled with various forms of aligned PAs, or left unrepaired. Motor and sensory recovery were determined and compared among groups. Our results demonstrate that Schwann cells are able to adhere to and proliferate in aligned PA gels, with greater efficacy in bioactive PAs compared to the backbone-PA alone. In vivo testing revealed recovery of motor and sensory function in animals treated with conduit/PA constructs comparable to animals treated with autologous nerve grafts. Functional recovery in conduit/PA and autologous graft groups was significantly faster than in animals treated with empty PLGA conduits. Histological examinations also demonstrated increased axonal and Schwann cell regeneration within the reconstructed nerve gap in animals treated with conduit/PA constructs. These results indicate that PA nanofibers may represent a promising biomaterial for use in bioengineered peripheral nerve repair.