Physical activity (PA), its location, social interactions and fundamental motor skills (FMS) were investigated in four-year-old Finnish children in day care. Six skills in the stability, locomotor and manipulative domains were assessed in 53 children (24 boys, 29 girls, normal anthropometry) with the APM-Inventory manual for assessing children’s perceptual and FMS and Total Motor Scores (TMS; 0–6 points) calculated. PA intensity, location, group composition and activity type − sitting, squatting, kneeling − were directly observed with a modified version of the Observational System for Recording Physical Activity in Children – Preschool Version (OSRAC – P) during three consecutive days in 14 centres. Altogether, 13,302 PA intervals were analysed. Results: Mean TMS was 2.45 (±1.8) points. Most PA intervals were coded as sedentary. Pearson Chi-squares indicated differences in PA intensities both between indoor and outdoor locations (p < 0.001) and between solitary and non-solitary group composition (p < 0.018). Indoors, more than 70% of intervals were spent being sedentary and 5% in moderate-to-vigorous PA (MVPA). Outdoors, sedentary accounted for 45% and MVPA 19%. When solitary, 57% of intervals were sedentary and 13% MVPA. When non-solitary, 60% of intervals were sedentary and 12% MVPA. Forty-eight per cent of intervals were spent sitting, squatting or kneeling. TMS were not significantly associated with biological factors, PA or social interaction, but outdoor PA tended toward statistical significance (IRR = 1.88, p = 0.070), indicating higher TMS in those who demonstrated more outdoor PA. We concluded that PA in day care may be inadequate to support children’s FMS development.