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Duramax Hole In Transfer Case

Hey guys this is AJ with 441 Diesel. I like to update this blog periodically to keep our customers and friends in the loop with common failures we see. We work on a lot of Duramaxs and a failure we run into a lot is a failure in the NP261XHD and NP263XHD transfer cases. The main issue we see in these cases is that a hole develops in the rear housing and leaks all the fluid out. Once all the fluid has ran out then we see a failure of the shift fork in most cases and this will cause it to drop out of gear going down the road or make a loud grinding noise. The cause of this failure is what we are gonna look at today.

The pump that supplies fluid to these transfer cases rides on the main shaft and the design flaw that causes the hole in the case is the clip pictured below. (courtesy of

This metal clip is designed the push against the pump to prevent the pump from contacting the housing. What happens in theory, as you can see below, is that the clip actually eats into the aluminum case and can wear a tiny hole in it.

The fix for this issue depends on the amount of damage done to the transfer case by the low fluid condition. In many cases the only damage will be to the shift fork. The fork in the picture here is the one that will be damaged in many cases. The plastic lining on the fork falls apart because of the heat and causes a lot of play in the fork area. This allows the collar to move and can cause the transfer case to drop into neutral.

The fix for the “pump rub” issue is a “pump rub repair kit”. These are available through Merchant Automotive online and provides a new design pump with long legs that sit against the housing and eliminate and rubbing issues. You MUST address any damaged components in the transfer case as well as replacing the rear half and installing this new pump. If you are having issues with your transfer case this may be your problem and 441 Diesel has your solution. Thank you for your time, AJ

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