The method of estimating and controlling driveline torque in a continuously variable hydro-mechanical transmission uses pressure data and other metrics of a hydrostatic power unit of the transmission in lieu of actual driveline torque data. A mechanical efficiency of the transmission is determined as a function of whether the power unit is operating in a power generation or regeneration mode, and the torque output of the power unit is estimated from that and other hydrostatic parameters. This is used to estimate a torque output of a planetary power unit of the transmission, and the torque on an output member of the driveline is then estimated using that value, and appropriate corrective action taken.