A method and system provides a Neutral Tow mode in a vehicle with a shift-by-wire transmission by displaying a Neutral Tow mode option when the transmission control mechanism has been used to select Park, an ignition switch is on, and an engine is off or an information button has been pushed and entering a Neutral Tow mode upon detecting a triggering event. The Neutral Tow mode is canceled upon detecting a certain sequence of events, such as turning on the ignition switch, depressing and holding a brake pedal, and selecting Park. When in Neutral Tow mode the transmission will stay in Neutral, without automatically shifting to Park or using battery power, thereby enabling the vehicle to be towed long distances without draining battery power.