Ankle impairment and lower limb asymmetries in strength and coordination are common symptoms for individuals with selected musculoskeletal and neurological impairments. The virtual reality augmented cycling kit (VRACK) was designed as a compact mechatronics system for lower limb and mobility rehabilitation. The system measures interaction forces and cardiac activity during cycling in a virtual environment. The kinematics measurement was added to the system. Due to the constrained problem definition, the combination of inertial measurement unit (IMU) and Kalman filtering was recruited to compute the optimal pedal angular displacement during dynamic cycling exercise. Using a novel benchmarking method the accuracy of IMU-based kinematics measurement was evaluated. Relatively accurate angular measurements were achieved. The enhanced VRACK system can serve as a rehabilitation device to monitor biomechanical and physiological variables during cycling on a stationary bike.