Danny Trejo is up and moving around on his own power -- a sight sure to calm fans after last week’s wheelchair sighting, and he insists ... don’t let the wheels fool ya, he’s doing fantastic!

We ran into Danny Sunday at his Trejo’s Cantina in Hollywood, and he assured us there’s zero cause for concern, telling us, "everything’s beautiful."

As you know, fans’ concerns were raised by seeing pics of the beloved actor in a wheelchair. Now, a source close to the 81-year-old told us he had a knee replacement ... and when it comes to airports, a wheelchair’s just the easier way to roll.

So yeah, like we told ya -- Danny’s doing just fine. And he’s saying it himself in this clip ... plus spilling on the party that was happening that night at his spot.

He also chopped it up about work -- dropping deets on an upcoming History Channel project later this month. Bottom line ... the "Machete" legend is alive, kicking, and all good!