A powertrain for transmitting power to the drive wheels of a vehicle includes a transaxle case containing a transaxle drive mechanism for producing variable ratios of a speed of its output and a speed of its input, a differential mechanism for transmitting power between the output and the wheels of a first set of drive wheel, a transfer clutch secured to the output for transmitting power between the output and the wheels of a second set of drive wheels, and a control system for hydraulically actuating the transfer clutch.