The purpose of this study was to quantify the effect of soft tissue artifact during three-dimensional motion capture and assess the effectiveness of an optimization method to reduce this effect. Four subjects were captured performing upper-arm internal-external rotation with retro-reflective marker sets attached to their upper extremities. A mechanical arm, with the same marker set attached, replicated the tasks human subjects performed. Artificial sinusoidal noise was then added to the recorded mechanical arm data to simulate soft tissue artifact. All data were processed by an optimization model. The result from both human and mechanical arm kinematic data demonstrates that soft tissue artifact can be reduced by an optimization model, although this error cannot be successfully eliminated. The soft tissue artifact from human subjects and the simulated soft tissue artifact from artificial sinusoidal noise were demonstrated to be considerably different. It was therefore concluded that the kinematic noise caused by skin movement artifact during upper-arm internal-external rotation does not follow a sinusoidal pattern and cannot be effectively eliminated by an optimization model.