A hydraulic system for a transmission has a diffuser housing with a fluid inlet passage that feeds one or more pump inlet ports, and a fluid return passage, such as to return fluid from a pressure regulator valve, that is in fluid communication with the fluid inlet passage. The hydraulic system also has a filter housing with a filter outlet portion that is in fluid communication with the fluid inlet passage upstream of the pump inlet port(s). The fluid return passage is downstream of the filter outlet portion. Thus, flow through the fluid return passage can create suction, causing increased flow through the filter outlet portion, such as from a fluid sump. Specifically, the diffuser housing is configured so that the fluid inlet passage has a converging portion downstream of the filter outlet portion and a diverging portion downstream of the converging portion.