In order to provide a shaft coupling between two aligned shafts in which the absolute minimum of torque transferred across the coupling due to misalignment is desired, and to further provide for the capability of mutual axial movement between the two shafts, a unique magnetic coupling is employed. The input shaft terminates in a yoke structure with permanent bar magnets mounted on the yoke facing surfaces. Like poles of the two bar magnets are disposed facing one another. The output shaft terminates in a third bar magnet which is introduced into the space between the other two bar magnets oriented with its north and south poles disposed, respectively, between the facing north poles and the facing south poles of the magnet pair on the yoke. There is thus mutual magnetic repulsion between the centrally disposed bar magnet on the output shaft and each of the bar magnets on the input shaft. Hence, when the input shaft is turned, the output shaft follows trailing slightly in phase by an angle which is a function of the transmitted torque and the strength of the magnets.