A reversible hand operated rotary power tool contains an internal mechanism for reducing the reaction torque that would otherwise be exhibited directly upon the housing, and hence imposed upon the hand of the operator. The mechanism is bidirectional, and reduces reaction torque to the same extent whether the tool is being operated in a forward direction or in a reverse direction. The mechanism includes a planetary differential mechanism having an input driven from a powered rotor, one separate output that is drivingly coupled to an output shaft, and another separate output that is drivingly coupled to an offset shaft that is laterally offset from the axis of the powered rotor. A lever system is employed to inhibit rotation of the offset shaft in either direction relative to the housing and thereby reduce reaction torque exhibited on the housing.