A digital torque wrench includes a position sensor assembly which measures the movement of a load beam with respect to an indicator beam to determine the torque being applied to a working element by the torque wrench. The position sensor assembly includes a first position sensor portion having multiple rotatable pinion gears coupled to a potentiometer, and includes a second position sensor portion having a rack gear that engages one of the pinion gears of the first position sensor portion. The first and second position sensor portions are attached to different ones of the load beam and the indicator beam so that at least one of the pinion gears rotates along the rack gear in response to force (torque) being applied through the load beam to the working element. Rotation of the pinion gears causes rotation of a potentiometer element, which produces a signal indicative of the relative displacement of the load beam with respect to the indicator beam. This displacement is then converted to a torque measurement and is displayed to a user via a display. The use of multiple pinion gears enables a high degree of resolution with respect to the torque measurements, while reducing the width profile of the torque wrench.