One of the most frequent complications of total hip replacement (THR) is aseptic loosening of femoral component which is primarily due to changes of post-operative stress distribution pattern with respect to intact femur. Stress shielding of the femur is known to be a principal factor in aseptic loosening of hip replacements. Many designers show that a stiff stem shields the surrounding bone from mechanical loading causing stress shielding. Others show that reducing stem stiffness promotes higher proximal interface shear stress which increases the risk of proximal interface failure. Therefore, the task of this investigation is to solve these conflicting problems appeared in the cemented total hip replacement. The finite element method and optimization technique are used in order to find the optimal stem material which gives the optimal available stress distribution between the proximal medial femoral bone and the cement mantle interfaces. The stem is designed using the concept of functionally graded material (FGM) instead of using the conventional most common used stem material. The results showed that there are four feasible solutions from the optimization runs. The best of these designs is to use a cemented stem graded from titanium at the upper stem layer to collagen at the lower stem layer. This new cemented stem design completely eliminates the stress shielding problem at the proximal medial femoral region. The stress shielding using the cemented functionally graded stem is reduced by 98% compared to titanium stem.