Abstract: A method for controlling a transfer case in an automatic four-wheel-drive driveline for a motor vehicle includes sensing if the engine is drivably decoupled from the transfer case and setting a first variable to "T" if the engine is decoupled, otherwise setting the variable to "F". The vehicle speed is sensed to determine if the speed is substantially zero and a second variable is set to "T" if the speed is substantially zero, otherwise the second variable is set to "F". Whether the vehicle is braking is sensed, and a third variable is set to "T" if the vehicle is braking, otherwise the third variable is set to "F". If all the first, second and third variables are "T", a shift condition flag is set to "T" to permit a shift of the transfer case through a neutral state, otherwise the shift condition flag is set to "F" and a shift of the transfer case through the neutral state is not permitted.