Falling is a common and significant cause of injury in elderly adults (>65 yrs old), often leading to disability and death. In the USA, one in three of the elderly suffers from fall injuries annually. This study’s purpose is to develop, optimize, and assess the efficacy of a falls detection algorithm based upon a wireless, wearable sensor system (WSS) comprised of a 3-axis accelerometer and gyroscope. For this study, the WSS is placed at the chest center to collect real-time motion data of various simulated daily activities (i.e., walking, running, stepping, and falling). Tests were conducted on 36 human subjects with a total of 702 different movements collected in a laboratory setting. Half of the dataset was used for development of the fall detection algorithm including investigations of critical sensor thresholds and the remaining dataset was used for assessment of algorithm sensitivity and specificity. Experimental results show that the algorithm detects falls compared to other daily movements with a sensitivity and specificity of 96.3% and 96.2%, respectively. The addition of gyroscope information enhances sensitivity dramatically from results in the literature as angular velocity changes provide further delineation of a fall event from other activities that may also experience high acceleration peaks.