The high stiffness of conventional intramedullary (IM) nails may result in stress shielding and subsequent bone loss following healing in long bone fractures. It can also delay union by reducing compressive loads at the fracture site, thereby inhibiting secondary bone healing. This paper introduces a new approach for the optimization of a fiber-reinforced composite nail made of carbon fiber (CF)/epoxy based on a combination of the classical laminate theory, beam theory, finite-element (FE) method, and bone remodeling model using irreversible thermodynamics. The optimization began by altering the composite stacking sequence and thickness to minimize axial stiffness, while maximizing torsional stiffness for a given range of bending stiffnesses. The selected candidates for the seven intervals of bending stiffness were then examined in an experimentally validated FE model to evaluate their mechanical performance in transverse and oblique femoral shaft fractures. It was found that the composite nail having an axial stiffness of 3.70 MN and bending and torsional stiffnesses of 70.3 and 70.9 , respectively, showed an overall superiority compared to the other configurations. It increased compression at the fracture site by 344.9 N (31%) on average, while maintaining fracture stability through an average increase of only 0.6 mm (49%) in fracture shear movement in transverse and oblique fractures when compared to a conventional titanium-alloy nail. The long-term results obtained from the bone remodeling model suggest that the proposed composite IM nail reduces bone loss in the femoral shaft from 7.9% to 3.5% when compared to a conventional titanium-alloy nail. This study proposes a number of practical guidelines for the design of composite IM nails.