This study aimed to develop a three-dimensional finite element model of a functionally graded femoral prosthesis. The model consisted of a femoral prosthesis created from functionally graded materials (FGMs), cement, and femur. The hip prosthesis was composed of FGMs made of titanium alloy, chrome–cobalt, and hydroxyapatite at volume fraction gradient exponents of 0, 1, and 5, respectively. The stress was measured on the femoral prosthesis, cement, and femur. Stress on the neck of the femoral prosthesis was not sensitive to the properties of the constituent material. However, stress on the stem and cement decreased proportionally as the volume fraction gradient exponent of the FGM increased. Meanwhile, stress became uniform on the cement mantle layer. In addition, stress on the femur in the proximal part increased and a high surface area of the femoral part was involved in absorbing the stress. As such, the stress-shielding area decreased. The results obtained in this study are significant in the design and longevity of new prosthetic devices because FGMs offer the potential to achieve stress distribution that more closely resembles that of the natural bone in the femur.