A limited slip differential having a modified clutch pack mechanism located outside of the differential case. The mechanism include a planetary gear assembly disposed between a side gear and the clutch pack to facilitate the application of greater torque. A rotatable collar and cup-shape member together with a pair of planetary gear sets establish a driving connection through the differential case between the side gear and the clutch pack. Clutch plates are alternatively splined on the cup-shaped member and differential case to facilitate selectively coupling therebetween. The incorporation of the external clutch pack and planetary gear set facilitate the use of a greater diameter clutch plates resulting in greater torque capability.