A hydrostatic transaxle axle assembly for a vehicle such as a grass mowing lawn or garden tractor comprising a housing for an internally disposed hydrostatic transmission having a variable-displacement hydraulic pump fluidly connected to a fixed-displacement hydraulic motor, the hydraulic motor being connected by differential gearing to axle shafts supported in the housing. The housing is formed by three housing members, two of which are preferably separable on a parting plane coincident with the longitudinal axes of the axle shafts. One of the housing members being provided with an opening to allow a portion of one of the other housing members to extend through, and where the extending housing member contains within its interior a number of internal fluid passages for fluidly connecting the hydraulic pump to the hydraulic motor. This construction allows for improved cooling of the power transmitting fluid flowing between the pump and motor and simplifies manufacture of the transaxle such that the bulk or all the machining operations can be carried out in only one of the three housing elements, this housing member being the smallest of the three which can be completed using a comparatively smaller sized CNC machining-center than would otherwise be the case. The two remaining housing elements may be used in an as cast or supplied condition.