Recent advances in wearable sensor technologies for motion capture have produced devices, mainly based on magneto and inertial measurement units (M-IMU), that are now suitable for out-of-the-lab use with children. In fact, the reduced size, weight and the wireless connectivity meet the requirement of minimum obtrusivity and give scientists the possibility to analyze children’s motion in daily life contexts. Typical use of magneto and inertial measurement units (M-IMU) motion capture systems is based on attaching a sensing unit to each body segment of interest. The correct use of this setup requires a specific calibration methodology that allows mapping measurements from the sensors’ frames of reference into useful kinematic information in the human limbs’ frames of reference. The present work addresses this specific issue, presenting a calibration protocol to capture the kinematics of the upper limbs and thorax in typically developing (TD) children. The proposed method allows the construction, on each body segment, of a meaningful system of coordinates that are representative of real physiological motions and that are referred to as functional frames (FFs). We will also present a novel cost function for the Levenberg–Marquardt algorithm, to retrieve the rotation matrices between each sensor frame (SF) and the corresponding FF. Reported results on a group of 40 children suggest that the method is repeatable and reliable, opening the way to the extensive use of this technology for out-of-the-lab motion capture in children.