A locking differential includes a dog clutch configured to selectively couple a carrier to an axle shaft in response to magnetic forces generated by electrical current in a coil. A method of operating the differential is adapted to avoid failed engagement attempts that could potentially damage the dog clutch. If a driver commands engagement of the locking feature while a differential speed, a controller waits to command engagement of the dog clutch until the differential speed decreases below a threshold. The controller measures or infers a temperature of the differential fluid and adjusts the threshold to higher values when the temperature is cold.