Abstract: A trailering velocity compensation system in a cruise control system is disclosed. The system includes a controller that is configured to: determine whether activation conditions for a trailering velocity compensation algorithm are met, and when the activation conditions are met, adjust a speed error used by the cruise control system; adjust a speed offset for application of brakes used by the cruise control system; adjust a speed offset for release of brakes used by the cruise control system; determine a set speed offset for inhibiting engine torque; determine a set speed offset for releasing engine torque inhibiting; adjust a headway time gap value used by the cruise control system; and control vehicle speed based on the adjusted speed error, adjusted speed offset for application of brakes, adjusted speed offset for release of brakes, set speed offset for inhibiting engine torque, set speed offset for releasing engine torque inhibiting, and adjusted headway time gap value.