Characteristics of physical activity are indicative of one's mobility level, latent chronic diseases, and aging process. Current research has been oriented to provide quantitative assessment of physical activity with ambulatory monitoring approaches. This study presents the design of a portable microprocessor-based accelerometry measuring device to implement real-time physical activity identification. An algorithm was developed to process real-time tri-axial acceleration signals produced by human movement to identify targeted still postures, postural transitions, and dynamic movements. Fall detection was also featured in this algorithm to meet the increasing needs of elderly care in free-living environments. High identification accuracy was obtained in performance evaluation. This device is technically viable for telemonitoring and real-time identification of physical activity, while providing sufficient information to evaluate a person's activity of daily living and her/his status of physical mobility. Limitations regarding real-time processing and implementation of the system for telemonitoring in the home environment were also observed.