A novel magnetostrictive-ring type torque sensor has been developed which used a new detection scheme for detecting the differential magnetic field and signal conditioning circuitry with the temperature drift compensation. Torque of a shaft was measured by detecting the leakage magnetic field emanating from the magnetostrictive-ring made of permendur Fe49Co49V2 which was attached to the stainless shaft. The magnetic sensor was constructed using a pair of commercial Hall ICs and a permalloy magnetic yoke embedded onto the circuit board. The temperature offset adjustment was accomplished by adding only four diodes and resistors to differential amplifiers. The measured sensitivity was 45 mV/Nm for the applied torque range from -4 Nm to +4 Nm.