A hybrid mechanical-electrical variable speed transmission for wind turbines is presented The concept consists of a planetary differential transmission in which one input is driven by the variable speed rotor and the second by the variable speed control system, both driving the main generator at a constant speed. The increase in the energy output is estimated to be of about 15 percent-20 percent using the new transmission with the same rotor. The control system, designed to operate efficiently at the entire anticipated wind speed range, varies the rotor speed to provide optimal output power for slow wind speed variations and to attenuate high frequency shaft torque fatigue damage in gusty wind operation. The net result is a cost effective system compared to contemporary variable speed solutions. Dynamic simulations are presented to demonstrate the improved system performance.