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With continued industry focus on reducing parasitic transmission and driveline losses, detailed studies are required to quantify potential enablers to improve vehicle fuel economy. Investigations were undertaken to understand the influence of lower viscosity Automatic Transmission Fluids (ATF) on transmission efficiency as compared with conventional fluids. The objectives of this study were to quantify the losses of lower viscosity ATF as compared with conventional ATF, and to understand the influence of ATF properties including viscosities, base oil types, and additive packages on fuel efficiency. The transmission efficiency investigations were conducted on a test bench following a vehicle-based break-in of the transmission using a prescribed drive cycle on a chassis dynamometer. At low temperature, the lower viscosity ATF showed a clear advantage over the conventional ATF in both spin loss and loaded efficiency evaluations.