This paper presents a modular system of wireless monitoring of physiological and ambient conditions based on Internet of Things (IoT). It is specially designed for elderly people and people with chronic diseases to promote their independent living. The system consists of a network of physiological and home ambient sensors developed under standard IoT protocols. These sensors are designed and manufactured at the laboratory with low-cost components. In addition, commercial sensors can be added according to the requirements of the patient. The system also provides a web based user interface for medical and family caregivers. It displays real time data and it includes an alarm system to report unsafe events via email. The caregiver can also see historical data with the possibility to compare all the parameters of a certain day and time. Furthermore, a home automation system was proposed to control home devices to improve home safety. The evaluation of the system was performed under a controlled environment at the laboratory in pilot tests before being tested in patients.