We propose a novel low-cost method for quantitative assessment of upper extremity workspace envelope using Microsoft Kinect camera. In clinical environment there are currently no practical and cost-effective methods available to provide arm-function evaluation in three-dimensional space. In this paper we examine the accuracy of the proposed technique for workspace estimation using Kinect in comparison with a motion capture system. The experimental results show that the developed system is capable of capturing the workspace with sufficient accuracy and robustness.