The work demonstrates an electrospun nanocomposite of recombinant spider silk protein (rSSp) nanofibers with embedded cerium oxide (ceria) nanoparticles. RSSP (MaSp1) has been produced, extracted from goat milk, and fabricated into nanofibers using an electrospinning process. The resulting electrospun nanofibers have a mean diameter of ∼50 nm. Furthermore, ceria nanoparticles of mean diameter <10 nm were added in the spinning dope to be embedded within the generated nanofibers. These nanoparticles show certain optical activity due to optical trivaliant cerium ions, associated with formed oxygen vacancies. The formed nanocomposite shows promising mechanical properties such as the Young’s modulus, elasticity (or elongation at break), and toughness. In addition, the electrospun mat becomes fluorescent with 520-nm emission upon exposure to UV light, due to excitation of the optically active ceria nanoparticles. Also, the formed nanocomposite shows a decay of its electric resistance over time upon exposure to cyclic loads at different humidity conditions. The synthesized nanocomposite can be utilized in different biomedical, textile, and sensing applications.