We investigated the microstructural basis of a reduced stress concentration around the primary nutrient foramen of the equine third metacarpus. We quantified the spatial variations of compositional parameters (mineral content, volume fraction, histological architecture, and osteonal trajectories) from microradiographs and polarizing microscopic images of thin sections. These variations in composition and organization in turn cause variations in mechanical properties of cortical bone. We modeled the spatially inhomogeneous anisotropic elastic properties based on the measured compositional parameters and used the properties as inputs to a finite element model of the bone containing the foramen. This model, spatially constructed solely from the microscopic images, was subsequently validated by our mechanical test results. We found that: (1) a primary mechanism for stress concentration reduction appears to be due to an increased compliance near the foramen: the sharp discontinuity represented by the hole is softened by embedding it in a compliant region; (2) a reinforcing ring of increased stiffness exists at some distance from the foramen; and (3) a ring of lamellar bone exists along the foramen inside edge, which might serve to reduce the chance of cracks forming there. Our work is allowing us to design biomimetic structures with holes by mimicking the microstructure near the nutrient foramen.