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Currently available synthetic small diameter vascular grafts reveal low patency rates due to thrombosis and intimal hyperplasia. Biofunctionalized grafts releasing nitric oxide (NO) in situ may overcome these limitations. In this study, a drug-eluting vascular graft was designed by blending polycaprolactone (PCL) with S-nitroso-human-serum-albumin (S-NO-HSA), a nitric oxide donor with prolonged half-life. PCL-S-NO-HSA grafts and patches were fabricated via electrospinning. The fabrication process was optimized. Patches were characterized in vitro for their morphology, drug release, biomechanics, inflammatory effects, cell proliferation, and expression of adhesion molecules. The selected optimized formulation (8%PCL-S-NO-HSA) had superior mechanical/morphological properties with high protein content revealing extended NO release (for 28 days). 8%PCL-S-NO-HSA patches significantly promoted endothelial cell proliferation while limiting smooth muscle cell proliferation. Expression of adhesion molecules (ICAM-1, VCAM-1) and pro-inflammatory macrophage/cytokine markers (CD80, IL-1α, TNF-α) was significantly reduced. 8%PCL-S-NO-HSA patches had superior immunomodulatory properties by up-regulating anti-inflammatory cytokines (IL-10) and M2 macrophage marker (CD163) at final time points. Grafts were further evaluated in a small rodent model as aortic implants up to 12 weeks. Grafts were assessed by magnetic resonance imaging angiography (MRI) in vivo and after retrieval by histology. All grafts remained 100 % patent with no signs of thrombosis or calcification. 8%PCL-S-NO-HSA vascular grafts supported rapid endothelialization, whereas smooth muscle cell proliferation was hampered in earlier phases. This study indicates that 8%PCL-S-NO-HSA grafts effectively support long-term in situ release of bioactive NO. The beneficial effects observed can be promising features for long-term success of small diameter vascular grafts. STATEMENT OF SIGNIFICANCE: Despite extensive research in the field of small diameter vascular graft replacement, there is still no appropriate substitute to autografts yet. Various limitations are associated with currently available synthetic vascular grafts such as thrombogenicity and intimal hyperplasia. Therefore, developing new generations of such conduits has become a major focus of research. One of the most significant signaling molecules that are involved in homeostasis of the vascular system is nitric oxide. The new designed nitric-oxide eluting vascular grafts described in this study induce rapid surface endothelialization and late migration of SMCs into the graft wall. These beneficial effects have potential to improve current limitations of small diameter vascular grafts.