This paper developes the preliminary studies on the measurements of dynamic torque in rotating shaft by utilizing the magnetic lattice. The intensity of torque is proportional to the relative angular displacement of two positions on the shaft some distance apart. This displacement can be detected as the phase differences between two magnetic sinusoidal signals which are generated by magnetic tapes wound around those two positions. The purpose of this research is, using data concerning phase differences including noise, to estimate the true value of the torque through the application of the Kalman Filter. First, a mathematical model of the torque dynamics can be represented by the state equation, from which the Kalman Filter algorithms are derived. Using the simulated data generated by the state equation, it is ascertained that the true value of the torque can be estimated accurately by the Kalman Filter. Next, this method is applied to real data obtained from the rotating shaft of a table lathe, and good estimated results are obtained, 1"ith the possibility of practical use.