A method and apparatus for self-relative body tracking in virtual reality systems using magnetic tracking is disclosed, which allows more accurate tracking of a user's body relative to the user's field of vision. A head-mounted magnetic tracking (HMMT) system is used, in which other parts of a user's body are tracked relative to the HMD on the user's head, rather than relative to a base station. This results in less distortion of the magnetic field used for tracking and thus allows for more accurate determination of the position and orientation of a user's body parts relative to the user's field of vision, so that a more accurate avatar may be presented on the HMD to the user. This allows the avatar of the user's body part to be shown in a location that corresponds closely to its physical position. In an alternative embodiment, multiple portions of the user's body may be tracked.