The present invention relates to a method for providing a controlled neutral in lieu of a conventional neutral in an electro-mechanical transmission. A powertrain system includes an internal combustion engine, a first electric machine and an electro-mechanical transmission operative to transmit torque to a driveline. A method for controlling the powertrain system in the presence of a controlled neutral operation of the electro-mechanical transmission being selected includes monitoring vehicle speed, and only when the monitored vehicle speed is indicative of a low-speed zone restricting a transition from a current engine operating state.