In recent years, many attentions have been paid on global environmental protection and energy saving; more people, therefore, have chosen bikes for commuting to work or school. For longer distance transportation and less effort, electric power assist bikes have re-entered the market. Due to regulation of some countries, electric bikes that must be pedaled were developed. These machines utilize the pedals as the dominant form of propulsion, with the motor used only to give extra assistance when needed for hills or long journeys. The ratio of electric power to human power may affect the riding feel. As a result, a torque sensor, which detects the pedaling force, is crucial in this application. This paper proposes a new design of torque sensor by way of twist angle measurement. It is composed of a torsion bar, input and output shaft with ring magnets and Hall sensors to achieve contactless sensing. It can be integrated with the rear wheel hub or the bottom bracket to detect the pedal force exerted on the chain. By selecting pole pairs of the ring magnets, the pedal position can also be obtained through the simple look-up table. This additional information can be used to identify the special situations to avoid the unwanted assistance. The mechanical design method and signal processing algorithm are discussed in this paper. Furthermore, the prototype sensor was implemented in a test bike as well.