In this work we present an instrumented smart knee prosthesis for in-vivo measurement of forces and kinematics. Studying the constraints, we designed minimal sensory systems to be placed in the polyethylene part of the prosthesis. The magnetic sensors and a permanent magnet are chosen and configured to measure the relative kinematics of the prosthesis. Moreover, the strain gauges were designed to measure the forces on the polyethylene part. The kinematic and kinetic measurements on a mechanical knee simulator are validated toward reference systems. The supplementary electronics, including the A/D, amplifier, rectifier and voltage doubler are designed. Consequently, by considering the necessary power budget for all the components to be performed, the optimal coils for remote powering is investigated. The system will be packaged in the polyethylene part. Therefore, by the end we will have a smart polyethylene part which can be easily modified for different types of the knee prosthesis without changing the prosthesis design.