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This paper describes a complementary Kalman filter design to estimate orientation of human body segments by fusing gyroscope, accelerometer, and magnetometer signals from miniature sensors. Ferromagnetic materials or other magnetic fields near the sensor module disturb the local earth magnetic field and, therefore, the orientation estimation, which impedes many (ambulatory) applications. In the filter, the gyroscope bias error, orientation error, and magnetic disturbance error are estimated. The filter was tested under quasi-static and dynamic conditions with ferromagnetic materials close to the sensor module. The quasi-static experiments implied static positions and rotations around the three axes. In the dynamic experiments, three-dimensional rotations were performed near a metal tool case. The orientation estimated by the filter was compared with the orientation obtained with an optical reference system Vicon. Results show accurate and drift-free orientation estimates. The compensation results in a significant difference (p<0.01) between the orientation estimates with compensation of magnetic disturbances in comparison to no compensation or only gyroscopes. The average static error was 1.4° (standard deviation 0.4) in the magnetically disturbed experiments. The dynamic error was 2.6° root means square.