Measurement of axial rotation of the humerus using marker-based motion capture is compromised due to soft tissue artefact. The aim of this study was to quantify the elastic deformation of markers on the humerus and evaluate the combined effects of elastic deformation and rigid displacement of the markers on humeral kinematics during axial rotation. Thirteen wheelchair users performed active humeral internal rotation whilst a Vicon motion capture system tracked 12 retro-reflective markers placed on the arm. Elastic deformation was quantified using the Optimal Common Shape Technique (OCST) and Ordinary Procrustes Analysis (OPA). The combined effects of elastic deformation and rigid marker displacement were quantified by comparing kinematics derived from only the humeral markers to the kinematics derived using the forearm segment (benchmark measurement). Elastic deformation of the markers demonstrated a systematic variation in the deformation pattern across the arm where the proximal markers lagged and the distal markers proceeded the OPA fitted reference shape of the marker cluster. There was a significant 48.7° underestimation in the range of axial rotation (P < 0.001). A secondary analysis was performed utilising only the distal arm markers on the humerus. The underestimation in axial rotation range of motion reduced to 25.9° and was not significantly different to the benchmark measurement from neutral through to internal rotation. Systematic elastic deformation of markers was present across the upper limb segment that adversely affected the estimation of humeral axial rotation. Careful selection of marker position for the arm cluster is needed minimise the effect of soft tissue artefact.