Hand gesture recognition (HGR) is used in a numerous applications, including medical health-care, industrial purpose and sports detection. We have developed a real-time hand gesture recognition system using inertial sensors for the smart home application. Developing such a model facilitates the medical health field (elders or disabled ones). Home automation has also been proven to be a tremendous benefit for the elderly and disabled. Residents are admitted to smart homes for comfort, luxury, improved quality of life, and protection against intrusion and burglars. This paper proposes a novel system that uses principal component analysis, linear discrimination analysis feature extraction, and random forest as a classifier to improve HGR accuracy. We have achieved an accuracy of 94% over the publicly benchmarked HGR dataset. The proposed system can be used to detect hand gestures in the healthcare industry as well as in the industrial and educational sectors.