One vehicle wheel is disconnected from a differential while the vehicle is in a front wheel drive mode. A controller checks for a malfunction of the differential while the vehicle is in the front wheel drive mode and in response to a request to enter an all wheel drive mode. If speeds of the other vehicle wheel and the differential input indicate that the malfunction is present, the all wheel drive mode is disabled and the driver is informed. If fluid temperature indicates a risk of the malfunction, all wheel drive mode is temporarily disabled and the driver is informed. If the temperature condition continues to be present for a predetermined duration, the all wheel drive mode is disabled.