A novel pressure-controlled hydro-mechanical transmission (PHMT) is studied in this paper. The PHMT consists of a pressure-controlled hydraulic transmission (PCT) and a variable displacement hydraulic motor. The PCT functions like a conventional hydrostatic transmission (HST) but has a different form. It uses a double-acting vane pump with a floating ring. By coupling the floating ring to an output shaft, the vane pump becomes a hydraulic transmission. The PCT combines the pumping and motoring functions in one unit, making it much simpler than a conventional HST. By controlling the pressure in the PCT, the output shaft torque and speed can be adjusted. By feeding the PCT control flow to a variable displacement motor coupled to the PCT output shaft, a PHMT is constituted. In this paper, the fundamental principle of the PHMT is studied. To demonstrate its advantage, the PHMT is applied to a fan drive system and the transmission efficiency is compared to a conventional HST. Preliminary experimental results show that the input power of the fan drive system with a PHMT is lower than that with an HST given the same output fan speed and torque.