In this study, a test methodology was developed for measurement of spur gear efficiency under high-speed and variable torque conditions. A power-circulating test machine was designed to operate at speeds to 10,000 rpm and transmitted power levels to 700 kW. A precision torque measurement system was implemented and its accuracy and repeatability in measuring torque loss in the power loop was demonstrated. Tests were conducted on gears with two values of module, and two surface roughness levels, operating in a dry sump jet-lubrication environment with three different gear lubricants. These tests were used to quantify the influence of these parameters on load-dependent (mechanical), load-independent (spin), and total power loss. Trends in mechanical gear mesh efficiency and total gearbox efficiency were discussed in terms of rotational speed and transmitted torque. Finally, recommendations were made for the design of spur gear pairs, surface roughness, and lubricant selection for improved efficiency.