Important: For ease of reassembly, if possible shift the transfer case to Neutral prior to removing any components.

1. Make sure the vehicle is parked so that it will not roll and set the parking brake.
2. Start the vehicle or turn the ignition to RUN.
3. Put the transmission in NEUTRAL (N).
4. Shift the transfer case to Two-Wheel High.
5. Simultaneously press and hold the Two-Wheel High and Four-Wheel Low buttons for 10 seconds. The NEUTRAL light will come on when the transfer case shift to NEUTRAL is complete.
6. Turn the ignition to ACCESSORY, which will turn the engine off.
7. Place the transmission shift lever in PARK (P).
8. Turn the ignition to LOCK.

1. Remove the encoder motor. Refer to Transfer Case Encoder Motor Replacement .
2. Place the encoder motor on a clean work bench.
3. Remove and discard 2 screws (2) from the motor cover.
4. Remove and discard 2 screws (1) from the casting.
5. Remove the cover.
6. Remove and save the shim on the output gear.
7. Remove and discard the orange rubber seal from the cover.



8. Remove the output gear (1).



9. Disassemble the harness connector (1) from the encoder.
10. Remove the encoder from the output shaft using a flat-tipped screwdriver.

1. Assemble the harness to the NEW encoder with the connector legend "TOP" (1) and the encoder part number facing up.
2. Assemble the output shaft into the encoder being sure to align the encoder tab with the groove on the shaft.
3. Ensure the encoder is seating properly on the output gear.
4. Place the output shaft/encoder on the casting.
5. Place the grommet harness on the casting slot, the flat area on the grommet will be facing up.



6. With the output gear/encoder assembly in hand, carefully align the casting and output gear timing marks (1).



7. At the same time be sure to align the encoder phasing post (1) with the phasing slot (2) in the casting and insert the shaft into the bushing.
8. Verify that the output gear and idler gear are engaged properly.
9. Seat the harness wires on the casting channel.
10. Place the shim on the output shaft gear.
11. Press a NEW seal into the cover.

Notice: Refer to Fastener Notice in the Preface section.




12. Install the cover.
13. Install 2 NEW screws (1) to the casting.

Tighten
Tighten the screws to 2 N·m (18 lb in).

14. Install 2 NEW longer screws (2) to the motor cover.

Tighten
Tighten the screws to 3 N·m (26 lb in).

15. Install the encoder motor. Refer to Transfer Case Encoder Motor Replacement .

1. Set the parking brake and apply the regular brake pedal.
2. Shift the transmission to NEUTRAL (N) and turn the ignition to RUN with the engine off.
3. Press the button for the desired transfer case shift position (Two-Wheel High, Four-Wheel High, AUTO 4WD, or Four-Wheel Low). After the transfer case has shifted out of NEUTRAL the NEUTRAL light will go out.
4. Release the parking brake.