A differential is a device, usually, but not necessarily, employing gears, capable of transmitting torque and rotation through three shafts, almost always used in one of two ways: in one way, it receives one input and provides two outputs—this is found in most automobiles—and in the other way, it combines two inputs to create an output that is the sum, difference, or average, of the inputs.

The following description of a differential applies to a "traditional" rear-wheel-drive car or truck with an "open" or limited slip differential combined with a reduction gearset:

Torque is supplied from the engine, via the transmission, to a drive shaft (British term: 'propeller shaft', commonly and informally abbreviated to 'prop-shaft'), which runs to the final drive unit that contains the differential. A spiral bevel pinion gear takes its drive from the end of the propeller shaft, and is encased within the housing of the final drive unit. This meshes with the large spiral bevel ring gear, known as the crown wheel. The crown wheel and pinion may mesh in hypoid orientation, not shown. The crown wheel gear is attached to the differential carrier or cage, which contains the 'sun' and 'planet' wheels or gears, which are a cluster of four opposed bevel gears in perpendicular plane, so each bevel gear meshes with two neighbours, and rotates counter to the third, that it faces and does not mesh with. The two sun wheel gears are aligned on the same axis as the crown wheel gear, and drive the axle half shafts connected to the vehicle's driven wheels. The other two planet gears are aligned on a perpendicular axis which changes orientation with the ring gear's rotation. In the two figures shown above, only one planet gear (green) is illustrated, however, most automotive applications contain two opposing planet gears. Other differential designs employ different numbers of planet gears, depending on durability requirements. As the differential carrier rotates, the changing axis orientation of the planet gears imparts the motion of the ring gear to the motion of the sun gears by pushing on them rather than turning against them (that is, the same teeth stay in the same mesh or contact position), but because the planet gears are not restricted from turning against each other, within that motion, the sun gears can counter-rotate relative to the ring gear and to each other under the same force (in which case the same teeth do not stay in contact).