Controlled-slip differentials (CSD) improve car operation under wheel slipping conditions. The performance of CSD's is dependent upon two criteria associated with clutch friction: “chatter” and “effectiveness.” “Chatter” is an undesirable noise which may occur during differential action. “Effectiveness” is a measure of the ability of the CSD clutches to transfer torque, during wheel slippage, to the wheel with the greater traction. The objective of this investigation was to definitely establish the cause of chatter, measure CSD effectiveness, and relate friction characteristics of lubricants to CSD operation. In tests with an instrumented car, it was found that both chatter and effectiveness are strongly influenced by the lubricant. Chatter occurred with lubricants that produced an increase in clutch friction with decreasing sliding speed. Chatter did not occur with lubricants containing friction modifiers which produced a decrease in clutch friction with decreasing sliding speed