Aims: The reconstruction of proximal humeral defects resulting from tumor resection is challenging. The purpose of this work was to retrospectively study the functional outcomes in patients with large bone defects after the resection of proximal humeral tumors. Methods: We performed a retrospective analysis of 49 patients with malignant or aggressive benign tumors in the proximal humerus at our institution between 2010 and 2021. Forty-nine patients were included in the study (prosthetic replacement, n = 27; shoulder arthrodesis, n = 22). The mean follow-up was 52.8 months (range, 14–129 months). The factors evaluated included the Musculoskeletal Tumor Society (MSTS) functional score, Constant Murley Score (CMS), and complications. Results: Of the 49 patients enrolled in the study, 35 were disease-free by the time of the latest follow-up, and 14 died because of the disease. Adjuvant therapies and medical comorbidities were similar between the two groups. Osteosarcoma was the most common abnormality among all the patients. The mean MSTS scores for surviving patients in the prosthesis and arthrodesis groups were 57.4% and 80.9%, respectively. The mean CMS score for the surviving patients in the prosthesis group was 43.47, and it was 61.44 for arthrodesis cases. Patients with shoulder arthrodesis demonstrated evidence of bony union at a mean of 4.5 months. Conclusions: Shoulder arthrodesis is a reliable reconstructive procedure in patients with large bone defects after the resection of proximal humeral tumors for pediatric osteosarcoma patients. Moreover, prosthetic replacement with anatomical implants results in poor function in older metastasis patients with large bone defects and resection of the deltoid muscle.