Vehicle handling is heavily influenced by the torque distribution to the driving wheels. This work presents a newly developed differential, designed to actively control the driving torque distribution to the wheels. The new device incorporates an electric machine, which can operate either as a motor or generator. A control unit monitors signals from various sources in the vehicle, such as steering angle, yaw acceleration and wheel rotational speed. Then, a control algorithm takes into account the steering angle rate and the vehicle speed in order to determine the suitable difference between output torque values. The handling improvement capabilities are evaluated by simulating in ADAMS/Car the driving behavior of a vehicle equipped with the new differential. The model that has been used to simulate vehicle handling is that of a Formula SAE type racing car. Results are obtained using the following three types of differentials: an open differential, a limited slip differential and the new actively controlled device. In all simulations, the same vehicle model has been used. Swept sine steering and split coefficient of friction (μ) acceleration driving conditions are tested for each differential type and the results are compared and evaluated. The aim of the paper is to shed some light on the advantages of the new torque distributing differential device. This is achieved by comparing simulation results such as trail, speed and yaw rate for the chosen driving conditions against those obtained by using the two common differential types.