Transient nonlinear localization and beat phenomena are studied in a system of two rods coupled with a nonlinear backlash spring. The method of Karhunen-Loeve (K-L) decomposition is used to reduce the order of the dynamics, and to study nonlinear effects by considering energy transfers between leading K-L modes. The computed K-L modes are used to discretize the governing partial differential equations, thus creating accurate and computationally efficient low-dimensional nonlinear models of the system. Reconstruction of transient nonlinear responses using these low dimensional models reveals the accuracy of the order reduction. Poincare’ maps are utilized to study the nonlinear localization and beat phenomena caused by the clearance connecting the coupled rods.