An important factor contributing to the process involved in choosing a rehabilitation intervention is the assessment of its impact on the real life of patients. Therapists and physicians have to infer the effectiveness of rehabilitation approaches from observations performed in the clinical setting and from patients' feedback. Recent advances in wearable technology have provided means to supplement the information gathered using tools based on patient's direct observation as well as interviews and questionnaires. A new generation of wearable sensors and systems has recently become available thus providing clinical personnel with a "window of observation" in the home and community settings. These tools allow one to capture patients' activity level and exercise compliance, facilitate titration of medications in chronic patients, and provide means to assess the ability of patients to perform specific motor activities. In this paper, we review recent advances in the field of wearable technology and provide examples of application of this technology in rehabilitation.