A prosthetic knee uses a hydraulic damper to regulate the rotation of the prosthetic knee joint. A magnetic rotary on-axis position sensor located at the joint between the upper and lower portions of the prosthetic knee measures the motion of the upper portion of the knee by detecting the magnetic field which is generated by a diametrically polarized magnet. A microprocessor correlates the measured motion to a knee joint angle, and adjusts the resistance provided by the hydraulic damper according to a corresponding stage of gait.