A method for making a differential housing having a ring gear integrally formed therein includes the steps of providing a differential housing having an annular rim integrally preformed therein; supporting the differential housing between upper and lower halves of a rotatable holding tool such that the annular rim extends radially outwardly from the holding tool for movement therewith; providing a thickening tool having a tool surface engagable with the annular rim during rotation of the holding tool to form a thickened lip; and providing a gear forming tool engagable with the thickened lip during rotation of the holding tool, whereby a plurality of teeth are formed along the lip to form the ring gear.