A power tool transmission is described in which an overload clutch mechanism is arranged to provide a relatively compact power tool. A torque adjustment dial is arranged between the visible portions of the motor housing and the gearbox, and the dial is coupled to a compression spring such that rotation of the dial cause the spring to be compressed or decompressed, thereby adjusting the torque at which the clutch overloads and ratchets. The compression spring is arranged at least partially between the motor and gearbox or gear train, in a space which conventional power tools do not utilized for this purpose. Thus, the dimensions of the power tool's transmission can be reduced with respect to conventional power tools. Furthermore, the space on the gearbox immediately behind a chuck can be used for another purpose other than accommodating the adjustment collar, as is the case with conventional power tools.