A transfer case for a motor vehicle having an input shaft, a first output shaft, a second output shaft, a clutch, a transfer mechanism, a sensor portion and a magnetoelastic torque sensor. The clutch has a clutch pack and a thrust mechanism that is configured to exert an engagement force on the clutch pack. The clutch pack has a first portion, which is rotatably driven by either or both of the input shaft and the first output shaft, and a second portion that is supported for rotation relative to the first portion. The transfer mechanism couples the second portion of the clutch pack to the second output shaft. The sensor portion is coupled to the first or second output shaft and is at least partially formed of a magnetoelastic material. The magnetoelastic torque sensor is disposed about and radially in-line with the sensor portion.

 
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