Limb salvage surgery for malignant tumours of proximal humerus is an operative challenge, where the surgeon has to preserve elbow and hand functions and retain shoulder stability with as much function as possible. We treated 14 consecutive patients with primary malignant or isolated metastasis of proximal humerus with surgical resection and reconstruction by nail cement spacer. There were 8 females and 6 males, with a mean age of 28.92 years (range 16–51 years) and a mean follow-up of 30.14 months (range 12–52 months). The diagnosis was osteosarcoma in 8 patients, chondrosarcoma in 4 patients and metastasis from thyroid and breast carcinoma in 1 patient each. One of our patients had radial nerve neuropraxia, 1 developed inferior subluxation and 3 developed distant metastasis. Two patients died of disease and one developed local recurrence leading to forequarter amputation, leaving a total of 11 patients with functional extremities for assessment at the time of final follow-up which was done using the Musculoskeletal Tumour Society (MSTS) score. Though we were able to preserve the elbow, wrist and hand functions in all patients, the abductor mechanism, deltoid muscle and axillary nerve were not salvageable in any of cases. The mean MSTS score at the time of final follow-up was 19.09. Thus, proximal humeral reconstruction using nail cement spacer is a technical simple, cost-effective and reproducible procedure which makes it a reliable option in subset of patients where the functions around the shoulder cannot be preserved despite costlier prosthesis.