This paper mainly focuses on the accurate estimation of the torque transferred through the engine clutch installed between the engine and the drive motor in parallel-type hybrid electric vehicles. The estimation of the engine clutch torque primarily relies on the forward-direction observer which uses the nominal engine net torque information. To overcome the limitation of using the nominal engine torque information that it may not be accurate during the transient states or due to the influence of external disturbance such as the road condition and wind, the forward-direction observer is supplemented by the use of reverse-direction observer which uses the driveline model and wheel speed measurements. In addition, the drive motor torque information is used to calibrate the nominal engine torque during the idle charging state, so that the driveline characteristic unique to parallel-type hybrid electric vehicle can be utilized to increase the estimation accuracy. Finally, the estimation performance of the designed observer is tested via simulation and experiments based on a real vehicle