Impeller speed, which is difficult to measure when a torque converter includes an impeller clutch, is estimated based on a known relationship among impeller speed, turbine speed, and turbine torque. Turbine torque may be directly measured by a turbine torque sensor or estimated based on other measurements such as output shaft torque or vehicle acceleration. The relationship is stored in a controller in terms of the coefficients of a second order polynomial relating turbine torque to impeller speed and turbine speed. A slip speed is calculated based on a measured input shaft speed and the estimated impeller speed. Closed loop control is used to adjust the impeller clutch torque capacity to maintain a target slip.