A method and instruments for replacing the articulating surfaces of a knee joint in which the diseased area is restricted to one of the medial and lateral compartments. A femoral intramedullary rod is placed down the center of the femur. A femoral cutting block is affixed at one side to the rod and at the other side to an outrigger attached to the femur by smooth pins. The cutting block is adjustable rotationally and in the anterior-posterior plane. The cutting block is provided with surgical saw guide slots for the posterior and distal articular surface cuts and the chamfer cuts, all of which are made with the cutting block in place. The cutting block is removed and a drill guide is used for drilling two holes in the distal articular cut surface for receipt of the mounting pegs of the femoral unicompartmental prosthetic implant. A tibial intramedullary rod is placed down the center of the tibia, to which is adjustably affixed a vertical cutting block, a horizontal cutting guide and a caliper measuring device. The caliper measuring device is used to properly locate the cutting guide and the horizontal tibial cut is made. Upon removal of the measuring device and cutting guide, the cutting block is used to guide the vertical cut. The cutting block and tibial intramedullary rod are removed. The tibial prosthesis is comprises a tray and a snap-in bearing insert. A tibial template is placed on the horizontal tibial cut surface and a hole for the tray mounting peg is drilled together with additional holes for mounting screws, if used.