Patients undergoing total knee replacement for end stage knee osteoarthritis (OA) become increasingly younger and more demanding. Consequently, outcome assessment tools need to evolve toward objective performance-based measures. We applied a novel approach toward ambulatory biomechanical assessment of physical function using a single inertial sensor located at the pelvis to derive various motion parameters during activities of daily living. We investigated the potential of a clinically feasible battery of tests to define relevant parameters of physical function. We compared preoperative measures of end stage knee OA patients to healthy subjects. Our results show that measures of time yield the highest discriminative capacity to differentiate between groups. Additionally we found disease-dependent and task-specific alterations of movement for inertial sensor-derived motion parameters with good discriminative capacity. The inertial sensor's output quantities seem to capture another clinically relevant dimension of physical function that is supplementary to time. This study demonstrates the potential of inertial sensor-based motion analysis and provides a standardized test feasible for a routine clinical application in the longitudinal follow-up.