A computer assisted knee replacement apparatus and method comprises a total knee replacement application for assisting, guiding, and planning a total knee replacement procedure (40, 12, 22, 28, 18 and 16). The apparatus and method cooperates with a tracking system to determine implant sizing and location. The apparatus and method also cooperates with the tracking system to determine implant size and location. The apparatus and method also cooperates with the tracking system to determine required tibial and femoral preparation corresponding to the implant size and location and provides real-time monitoring of the tibial and femoral surface preparation procedures.