An axle assembly for use in lawn tractors, pedestrian walk-behind mowers and snow blowers in the form of a housing having an internally disposed hydrostatic transmission and speed reducing gearing. An input shaft supported in the housing for driving a variable-displacement hydraulic pump of the hydrostatic transmission, the pump fluidly coupled to a fixed-displacement hydraulic motor of the hydrostatic transmission, and where the motor is drivingly connected through the speed reducing gearing to an output axle shaft or shafts. A mechanical differential disposed within said housing for applications requiring differential speeds of said axle output shafts. The housing being formed by three housing members and joined together along a substantially planar and horizontally peripheral seam formed therebetween such that two of said housing members are to one side of said seam and join with the third housing element. Two internal chambers formed by the three housing elements where one chamber contains the hydrostatic transmission and the other chamber contains the speed reducing gearing. A connecting shaft spanning between the chambers to provide the power transmission link between the hydrostatic transmission and the speed reducing gearing.