A miniature noncontact torque sensor has been developed to be mounted on an engine for use in engine control systems. The sensor is installed in a last main bearing of the engine crankshaft. The principle is based on the measurement of torque-induced change in magnetic properties of a crankshaft due to the magneto-strictive effect.A new signal processing has also been developed. The method is very superior in linearity and stability of the output signal. Performance of the sensor examined on an engine-dynamometer arrangement is described.