Electric propulsion has become the solution for large marine vessels over conventional combustion engine propulsion. An azimuth thruster is the primary propulsion unit in such electrified ships, and it has become prevalent recently. However, the mechanical failures among bevel gear. coupling, and bearing in the thruster are reported commonly, and it may be attributed to the dynamic mismatch and torsional oscillations between the motor drive and mechanical drivetrain systems. One main advantage of using electric propulsion is its flexible and instant torque control that can reduce the torsional stress in the drivetrain. In this paper, a new speed difference-based active torque compensating method is proposed. A detailed model for the azimuth propulsion system is developed, and a power electronics-based controller is used to manage the excessive drivetrain torque caused by a sudden load change. The proposed controller can change the damping ratio by introducing virtual material damping in the system, which decreases the resonant torque amplitude in the driveline. The resonant torque attenuating effects are validated both by simulation and experiment with a multi-inertia model operating at rapid ventilation.