Abstract: The present invention provides the ability to calibrate magnetic sensors for magnetic distortions caused by soft- and hard-iron magnetic interference without a use of any conventional means of magnetic calibration. The system utilizes data collected from an attached camera to track orientation changes during operation that are, then, used to calculate magnetic calibration parameters. The system embodiment allows for calibration to be performed as a background process while the system is in operation. Additionally, the system automatically corrects calibrations in applications where the interference characteristics of the object under measure change. Moreover, the system can be used with unknown absolute heading which may be estimated based on optical data at the same time with magnetometer auto-calibration as an extension to the estimation algorithm.