A transmission includes a latch valve with latched and de-latched states. In the de-latched state, the latch valve directs a control pressure to a clutch apply circuit. In the latched state, which is entered in response to a control pressure higher than a latch pressure, the latch valve directs a line pressure to the clutch apply circuit. A controller manages the transition from latched to de-latched differently depending upon the transmission input torque and gear state. At high transmission input torque, the controller first reduces the control pressure to rapidly accelerate a spool in the latch valve, and then increases the control pressure to prevent clutch slip. At low torque, the controller reduced the pressure to an intermediate value during the transition and then reduces it again. At moderate torques, the controller reduces the pressure directly to a target pressure in a single step.