In many real time applications, information of transmitted torque is a mandatory input of the embedded control strategies. In the most of cases, the use of a physical torque sensor (strain gauge) is compromised by cost and bulk reasons and the torque is not measured. Unfortunately, the need of an embedded torque measurement is a general real time application problem and can only be solved through an accurate embeddable estimation method. This issue is especially common in automotive industry concerning the powertrain management for example. A virtual strain gauge based on an unknown input Takagi–Sugeno discrete observer designed in the angular domain and a shaft angular deformation estimation method is proposed as a universal torque estimator. The static torque estimation is ensured rebuilding the shaft torsion angle by a virtual tooth adding method into the encoder sensors disposed at each edge of the shaft. The observer performs the dynamic part of the transmitted torque through a mass-spring model structure of the shaft. The virtual strain gauge has been applied on real torque estimation issues in automotive application such as the engine and the clutch torque estimation. Simulation and real time results have permitted to validate the feasibility, the versatility and the accuracy of the virtual strain gauge.