A method for setting the internal-external rotational position of a prosthetic femoral component with respect to the tibial comprising: forming a cylindrical surface on the posterior femoral condyles, said cylindrical surface formed about an axis extending in a proximal distal direction with respect to the femur; placing a template having a cylindrical guide surface for engaging said posterior femoral condyles against a planar resected surface of the distal femur with said guide surfaces in contact with said cylindrically shaped posterior condyles; and rotating said template on said cylindrical guide surface as the knee joint is moved from flexion to extension until the template cylindrical guide surfaces are in a position with respect to the tibial condyle surfaces to properly balance the knee ligaments.