Intramedullary interlocking nail is an effective treatment for tibial diaphyseal fracture. The contact between medullary rod and diaphyseal cortex is able to enhance fracture stability. However, how and to what degree the contact affects fracture healing and subsequent bone remodeling is still unclear. To investigate this, fracture healing and remodeling algorithms were combined, improved, and used to simulate the healing and remodeling processes in a transverse tibial diaphyseal fracture fixed with an intramedullary interlocking nail device. Two different diaphyseal fracture statuses, three different initial loading levels, and two nail materials were considered. The results showed that the medullary contact could significantly enhance the fixation stability; the strain reduction was up to 80% in the initial granulation callus. However, low initial loading level was found to be a more potential risk factor for the insufficient loading-induced nonunion other than medullary contact and stiffer nail material. Furthermore, the stabilizing effect of medullary contact diminished when stiff bone tissue formed in the callus; thus, the remodeling in the long-term was not affected by medullary contact. Copyright © 2016 John Wiley & Sons, Ltd.