Abstract: Self-calibrating AC magnetic tracking systems and combination “outside-in” and “inside-out” architectures offer unique motion tracking capabilities. More area is covered with minimal distortion using the tracking system itself to determine overall P&O based on the P&O of an initial, reference marker. The output as anticipated and needed by the user is output without confusion and without costly and time-consuming metrology while covering a large region when distance from the reference may be great. A method according to the invention includes the steps of positioning a plurality of stationary AC magnetic “markers” in a tracking volume and moving a mobile AC magnetic marker proximate to a first one of the stationary markers designated as a reference marker. The position and orientation (P&O) of the mobile marker is determined relative to the reference marker, then moved so as to be proximate to a second one of the stationary markers.