A novel type of signal processing for a magnetic micro torque sensor is described and simulated. The sensor principles are based on a soft magnetic core shaped as a yoke, two current-carrying coils, a soft magnetic amorphous ribbon with strong magnetostrictive properties that is fixed on a shaft, and at least two magnetic flux-density sensors. The sensor determines directly the change of permeability of the amorphous ribbon on the shaft. Nevertheless, the variation of the air gap between the sensor and the rotating shaft affects the measurement principle. Therefore, the magnetic flux density is measured at two positions, one at the face of the soft magnetic core and the other beside the face of the core in the area of the stray flux. The evaluation of these two flux densities yields the distance between the sensor and the shaft as well as the permeability of the amorphous ribbon. The problem arising with this practice is the determination of the sensitivity of the flux-density sensors. As the current-carrying coils are alternately operated in a common and a push-pull mode, the unknown sensitivities of the flux-density sensors do not affect the evaluation of the permeability of the amorphous ribbon on the shaft.