To solve the problem that vehicle mass and road grade in automatic transmission control system are difficult to measure, the state-space model of system was established based on the vehicle longitudinal dynamic model, using the optimal estimation theory. The forward Euler method was adopted for discretization of the process equation. The Jacobian of the process equation was calculated for linearization of the non-linear process function. Then, the vehicle mass and road grade estimation algorithm using extended kalman filter was developed. The simulation using road test data was carried out in Matlab/Simulink environment. The simulation results show that this algorithm could estimate vehicle mass and road grade effectively and meet the requirements of the automatic transmission control system.