Abstract: An apparatus and method for demagnetizing a differential which has a controllable electromagnetically actuated clutch. The apparatus includes sensors and a coil connected to a control module. The sensors receive vehicle inputs to indicate various measured values such as vehicle speed, brake pressure, magnetization current provided to the differential, and the like and generates signals which are transmitted to the control module. The control module initiates a demagnetization cycle when certain conditions have been satisfied as indicated by the input signals. The control module provides a DC voltage to the coil to generate magnetic flux for demagnetizing the differential and the components of the differential. In one embodiment a single coil is provided to which is applied both magnetization and demagnetization current. In another embodiment two coils are provided, one for generating magnetization flux and the other for generating demagnetization flux.