A compression device and method for interlocking compression nailing systems provide a compression force onto fracture site and a bone fixed between proximal and distal parts of intramedullary nail to prevent stress shielding and improve healing. The compression device having pre-assembled components of set screw, elastic component, distal cap and connector screw are rotated. After nail insertion, the nail is fixed to the bone fragments by inserting the fasteners into distal bores and proximal slot. The compression device is inserted within the bore of the nail. The set screw is screwed to move elastic component and distal cap to push the proximal bone fragment distally. Distal cap overlies on fastener screw shaft to spread compression forces in fastener screw surface to prevent stress concentration. After fracture gap minimization, the set screw is screwed further to compress elastic component to provide desired compression force.