Distraction osteogenesis is a procedure to correct bone deformity by breaking the bone and slowly pulling the fragments apart to stimulate bone growth. General bone deformities are three-dimensional in nature, requiring correcting of bone angles in 3D space and also bone length. However, commercially available external fixators are either unable to simultaneously correct for both angular and length deformity or are bulky and require as many as six joints that are adjusted by patients. In this paper, we propose a novel concept of correcting a 3D bone deformity using only two active degrees of freedom (2DOF), or two patient controlled joints, by expressing the orientation deformity of the bone using the axis-angle representation and the length discrepancy as a translation in 3D space. This requires a new device design with two patient-controlled joints, a revolute joint and a prismatic joint, that can be placed in any orientation and position to allow multiple configurations of the device. This in turn allows it to correct for all typical 3D deformities. The aim of our project is to develop the 2DOF axial external fixator and an algorithm for a planner to find the optimal fixator configuration and the correction schedule for a given deformity. An algorithm for the placement of the two patient-controlled joints relative to the osteotomy site was developed. A set of test data extracted from a deformed sawbone was used to check the performance of the proposed computational method. The desired bone trajectory was defined as a straight line from initial to target position, and the optimal position of the revolute joint gives an error of only 0.8 mm. We conclude that the proposed 2DOF device and the computational planner can correct typical bone deformity and works well for the test case in simulation.