This paper addresses the development of an inertial-sensor-based dynamic system for measuring the displacement of PKM (parallel kinematic machine) struts and the tool centre point (TCP) pose. An inherent problem of inertial positioning systems is the growth, with time, of errors in the measured velocity and position; in the system described in this paper they are corrected by using an external reference measurement and Kalman filtering. Through the combination of the inertial data with an external encoder measurement, a velocity profile containing improved dynamic information can be calculated. The key steps required for the integration of the inertial and encoder measurement systems are introduced, these include the formulation of a system and measurement model and Kalman filter estimation and simulation. Experiments were performed with a single PKM-strut test bed for linear movement to simplify and verify the system. The effects of the system on full PKM machine performance was tested using data from the single strut tests on an emulated PKM. The experimental results are presented and analysed.