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Biodegradable nanoparticles (PEG-PCL) decorated with tetra peptides (IKRG) on the surface were evaluated for their potential to deliver drugs into neurons for neural regeneration. The chosen 4-amino-acid peptide sequence was reported previously to mimic the function of BDNF (brain-derived neurotrophic factor) and target TrkB receptors that are present in abundance in neurons. Enhanced uptake for peptide-modified nanoparticles was observed in TrkB-positive PC12 cells but not in TrkB-negative HeLa cells. The modified nanoparticles were internalized selectively into neurons of dorsal root ganglion (DRG) and at a significantly higher rate. VO-OHpic, an inhibitor of PTEN (Phosphatase and tension homolog deleted on chromosome 10), was encapsulated into the modified nanoparticles and released over 14days. Prolonged and enhanced neural regenerative effect, as confirmed by increased pAKT expression and increased neurite density, was observed when DRGs were treated with drug-containing nanoparticles. This was attributed to the increased and targeted cellular uptake and sustainable release by the peptide-modified nanoparticles. Furthermore, nanoparticle encapsulation was found to reduce the cytotoxicity of the free drug to the neurons. Our findings support that the BDNF-derived peptide modified PEG-PCL nanoparticles are promising carriers for localized and controlled drug delivery to peripheral neurons.