Background: Complete tumor removal and damaged nail bed repair are critical factors that determine the success of subungual tumor excision. We examined a modified proximally based nail bed flap approach for excision of subungual bone tumors of the distal phalanx and present cases where this approach was used, along with postoperative functional and cosmetic outcomes. Methods: Twenty-four benign subungual bone tumors, identified from 23 patients (9 males and 14 females), were included in this study. All patients underwent tumor excision by the modified proximally based nail bed flap approach. Pain was assessed using a numeric rating scale, and cosmesis was self-assessed using a visual analog scale preoperatively and 1 year postoperatively. We measured sensation of the involved digit tip, relative to opposite-side sensation, using static and moving two-point discrimination and Semmes–Weinstein monofilament tests 1 year postoperatively. Lastly, we assessed postoperative nail deformities and tumor recurrence as potential surgical complications. Results: Mean pain severity and cosmesis were significantly improved 1 year postoperatively. There were no significant differences in the digit tip sensation between the involved and the opposite-side digits 1 year postoperatively. We observed one case of tumor recurrence and four cases of postoperative nail deformities. Conclusions: The modified proximally based nail bed flap approach showed satisfactory functional and cosmetic outcomes. This approach enables a low rate of recurrence after removal of benign subungual bone tumors in the short term and cosmetically superior nail bed repair. Level of evidence: Therapeutic, IV