A vehicle includes a control system for reducing oversteer by controlling an electronic limited-slip differential (eLSD). The eLSD has one or more clutches configured to selectively distribute a controlled and varied amount of drive torque between a pair of wheels during a turn. At least one controller is programmed to operate the eLSD in (i) a tow-mode in response to the vehicle towing an object and (ii) a non-tow-mode in response to the vehicle not towing an object. When operated in the tow-mode, the eLSD is controlled by the controller to actively reduce a difference in speed between the wheels compared to when the eLSD is operating in the non-tow-mode or is not operated in the tow-mode.