The C-arm fluoroscope is an indispensable intraoperative 2D imaging device for orthopaedic surgery. However, its frequent use in an operation presents a significant radiation hazard to the theatre staff and patient. A recent technique known as virtual fluoroscopy (VF) enhances the fluoroscope's capability for image guided surgery by tracking optically the position of the C-arm, surgical instruments and the patient. Virtuality is achieved by overlay of surgical instruments onto one or more previously captured fluoroscopic images. A key benefit of VF is that it reduces considerably the radiation hazard. This paper reports on a new VF technique for tracking and calibration of the fluoroscopic C-arm. Also reported is the use of our VF system to provide a new image guided technique for the accurate placement of the femoral component of unicompartmental knee prosthesis.