Large diaphyseal bone defects often are reconstructed with large structural allografts but these are prone to major complications. We therefore asked whether impacted morselized bone graft could be an alternative for a massive structural graft in reconstructing large diaphyseal bone defects. Defects in the femora of goats were reconstructed using a cage filled with firmly impacted morselized allograft or with a structural cortical autograft (n = 6 in both groups). All reconstructions were stabilized with an intramedullary nail. The goats were allowed full weightbearing. In all reconstructions, the grafts united radiographically. Mechanical torsion strength of the femur with the cage and structural cortical graft reconstructions were 66.6% and 60.3%, respectively, as compared with the contralateral femurs after 6 months. Histologically, the impacted morselized graft was replaced completely by new viable bone. In the structural graft group, a mixture of new and necrotic bone was present. Incorporation of the impacted graft into new viable bone suggests this type of reconstruction may be safer than reconstruction with a structural graft in which creeping substitution results in a mixture of viable and necrotic bone that can fracture. The data suggest that a cage filled with a loaded morselized graft could be an alternative for the massive cortical graft in reconstruction of large diaphyseal defects in an animal model.