A transfer case (16) having a primary output shaft (32), a secondary output shaft (42), and a transfer clutch (50) disposed therebetween. The transfer clutch (50) includes an inner drum (130) journalled on the primary output shaft (32) and which has clutch teeth (136) that are selectively engageable with clutch teeth (138) on the primary output shaft (32), an outer drum (116) rotatably supported on the primary output shaft (32) and which is fixed for rotation with the secondary output shaft (42), and a clutch pack (158) operably interconnected between the inner and outer drums. The transfer clutch (50) also includes an apply plate (160) that is coupled for rotation with the primary output shaft (32) and which is moveable for exerting a compressive clutch engagement force on the clutch pack (158), a primary spring (176) which acts between the inner and outer drums for biasing the inner drum toward a "disconnect" position whereat its clutch teeth (136) are disengaged from the clutch teeth (138) on the primary output shaft, and a secondary spring (178) which acts between the inner drum (130) and the apply plate (160) for biasing the apply plate (160) toward a "released" position whereat it is disengaged from the clutch pack (158). The transfer case (16) further includes a power-operated actuator assembly (52) for causing movement of the apply plate, sensors (54) for detecting vehicle conditions and generating sensor signals, a mode selector (56) for permitting a vehicle operator to select a desired drive mode and generate a corresponding mode signal, and a controller (58) for controlling actuation of the actuator assembly in response to the sensor and mode signals.