There is growing interest in using inertial sensors to continuously monitor gait during free-living mobility. Inertial sensors can provide many gait measures, but they struggle to capture the spatial stability of the center-of-mass due to limitations estimating sensor-to-sensor distance. While the margin of stability (MoS) is an established outcome describing the instantaneous mechanical stability of gait relating to fall-risk, methods to estimate the MoS from inertial sensors have been lacking. Here, we developed and tested a construct, based on centripetal acceleration, to estimate the lateral MoS using inertial sensors during walking and turning. Using three sensors located bilaterally on the feet and lumbar spine, the lateral MoS can be consistently and reliably estimated based on the average centripetal acceleration over the subsequent step. Relying only on a single sensor on the lumbar spine yielded similar results at the expense of identifying left versus right stance foot. Additionally, the centripetal acceleration estimate of lateral MoS demonstrates clear differences between walking and turning, inside and outside turning limbs, and speed. While limitations and assumptions need to be considered when implemented in practice, this method presents a novel, reliable way to estimate the lateral MoS during free-living community ambulation using inertial sensors.