A fail-to-neutral diagnostic technique for a transmission that includes a variator may include monitoring a state of a pressure differential valve fluidly coupled to a high side pressure applied to at least one actuator coupled to at least one corresponding roller of the variator and also fluidly coupled to a low side pressure applied to the at least one actuator, determining from the state of the pressure differential valve a variator torque sign corresponding to whether torque transferred by the at least one roller is positive or negative, determining an expected variator torque sign based on current operating conditions of the transmission, and commanding the transmission to a true neutral condition if the determined variator torque sign is different from the expected variator torque sign.