The Portuguese population is aging at an increasing rate, which introduces new problems, particularly in rural areas, where the population is small and widely spread throughout the territory. These people, mostly elderly, have low income and are often isolated and socially excluded. This work researches and proposes an affordable Ambient Assisted Living (AAL)-based solution to monitor the activities of elderly individuals, inside their homes, in a pervasive and non-intrusive way, while preserving their privacy. The solution uses a set of low-cost IoT sensor devices, computer vision algorithms and reasoning rules, to acquire data and recognize the activities performed by a subject inside a home. A conceptual architecture and a functional prototype were developed, the prototype being successfully tested in an environment similar to a real case scenario. The system and the underlying concept can be used as a building block for remote and distributed elderly care services, in which the elderly live autonomously in their homes, but have the attention of a caregiver when needed.