A single stage bone-transport procedure has been shown effective in bridging critical sized diaphyseal bone defects. The procedure harnesses the regenerative potential of the periosteum to infill defects fully with woven bone within two weeks of surgery. In this study, we aim to elucidate the dynamic micromechanical environment of the defect zone. We developed a displacement-driven FE model of the defect, periosteum, and interlocked intramedullary nail in situ, to predict strains and fluid flow within the defect. We hypothesized that areas of greatest mechanically-modulated transport in the defect have significant effects on patterns of de novo bone generation throughout the defect. The FE model was validated using optical strain measurements. This model serves as a preliminary feasibility study for future models to more accurately predict strain, fluid flow, and mass transport within the defect for the study of physical and chemical effects on de novo tissue building by stem cells.