Objective To investigate the effect of annular external fixator-assisted bone transport in the treatment of traumatic massive bone defect of tibia on clinical healing, pain stress, and joint function. Methods From January 2018 to November 2021, 146 patients with traumatic massive bone defect of tibia were selected as the research objects, and they were divided into observation group (annular external fixator-assisted bone transport, 71 cases) and control group (unilateral external fixator bone lengthening, 75 cases) according to different surgical methods. The therapeutic efficacy, fracture healing-related indexes, and postoperative range of motion of the knee joint were compared between the two groups. Callus healing was evaluated by Fernandez-Esteve callus score, and joint function was evaluated by Paley score, American Knee society score (AKSS), and Baird-Jackson ankle score. The changes of pain mediator (serum substance P (SP), neuropeptide Y (NPY), prostaglandin E2 (PGE2), and tumor necrosis factor-α (TNF-α)) and stress indexes (adrenocorticotropic hormone (ACTH), cortisol (COR), and nor Epinephrine (NE)) were observed before and after treatment in two groups. The incidence of postoperative complications was analyzed. Results There were no significant differences in total effective rate and bone lengthening between the two groups (P > 0.05). The bone healing time and callus formation time in the observation group were shorter than those in the control group, and the Fernandez-Esteve callus score was higher than that in the control group (P < 0.05). The levels of SP, NPY, PGE2, TNF-α, ACTH, COR, and NE in the observation group were lower than those in the control group (P < 0.05). AKSS and Baird-Jackson scores in the observation group after operation were higher than those in the control group (P < 0.05). There was no significant difference in the incidence of postoperative complications between the two groups (P > 0.05). Conclusion Annular external fixator-assisted bone transport can promote postoperative fracture healing, reduce pain stress level, and improve joint function of patients with traumatic massive bone defect of tibia.