A method for controlling transient operation of a rotary electric machine in an electric powertrain or other electrical system includes, during a shunt angle transition occurring during a maximum torque per ampere (MTPA) control region, determining an estimated output torque of the electric machine via a torque estimation block using d-axis and q-axis current commands and an additional value, i.e., an actual shunt angle or a machine temperature. The method includes subtracting the estimated output torque from a commanded output torque to derive an adjusted commanded torque value or torque error, and calculating, from the torque error, a delta d-axis current command and a delta q-axis current command. The method includes adjusting d-axis and q-axis current commands using the delta commands to produce adjusted d-axis and q-axis current commands, which are then used as closed-loop feedback control terms by the torque estimation block.