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Transfer Case Pump Upgrade Kit | 1998-2007

31 Reviews
SKU: 10001

Earn 7500 Boost Points


The Merchant Automotive Transfer Case Pump Upgrade is the best upgrade you can perform on your 1998 to early-2007 GM transfer case by completely preventing the ever increasing problem of pump rub and catastrophic transfer case fluid loss. The kit can be installed proactively in a transfer case that has not yet succumb to a pump rub failure as a preventative maintenance measure. If your transfer case has already had a pump rub failure the MA Transfer Case Pump Upgrade can be installed as part of your repair to prevent future failure.




To view/download installation instructions click here.


To view the Merchant Automotive installation video click here.


To view the Truck U segment on the Merchant Automotive Transfer Case Pump Rub kit click here.


What is a Transfer Case “Pump Rub” Failure?


GM transfer cases used from 1998 through early 2007 use a gear pump inside the case that is driven off the mainshaft. The pump forces oil to the planetary as well as the drive sprocket sleeve. Because the pump is driven by the shaft, the housing of the pump must "float" in the rear housing. There are tabs around the pump housing that fit into spots in the rear housing to locate the pump housing and prevent it from spinning inside the case with the mainshaft. Over time, the pump tabs can start to wear on the rear housing. GM installed a spring steel clip in the housing intended to prevent wear, but the clip can break and be rendered useless.


Since the pump housing is aluminum and is a harder material then the magnesium rear housing, it can wear a hole in the rear housing and cause a very small leak. This leak is frequently high enough on the case that it typically will not leak when vehicle is not moving and therefore not leaving any drops on the ground; it will however leak while the vehicle is in motion. Unfortunately, since the transfer case does not have a low fluid indicator the pump rub failure is often not found until there is transfer case damage from running the case out of fluid.


Avoid costly repairs to your transfer case by preventing “Pump Rub” by installing a Merchant Automotive Transfer Case Pump Upgrade kit in your transfer case today, before it happens to your vehicle.


With installation of this kit, you will have a LIMITED LIFETIME WARRANTY against pump rub. If your case ever wears a hole in the new rear housing with the upgrade installed. We will buy you a new transfer case. However, if you already have a hole in your case, we recommend installing a new rear housing for a complete repair. The MA Lifetime Warranty will only apply to installations with a new rear housing.




I have a 2007 or newer GM 4X4. Do I have to worry about “pump rub” failure in my transfer case?


No, GM changed the transfer case design and we have not seen evidence of “pump rub” failures in 2007 and newer GM trucks or SUVs.



When is the best time to install the Merchant Automotive Transfer Case Pump Upgrade kit?


Honestly, any time is a good time to install the Merchant Automotive Pump Upgrade kit in a transfer case that doesn’t have it yet. But, the BEST time to install one is NOW, do it before the rear case half has a hole worn through it due to an internal “pump rub” failure.

What do I do with the OEM anti rattle clip when installing the pump upgrade?


Discard the factory clip during installation of the MA Transfer Case Pump Upgrade kit. It has been designed and precision machined to work with the clip removed.



What other parts will I need to install the pump upgrade kit?


We tried to make the kit all-inclusive for a basic installation when it is being installed as preventative measure. If it is being installed as part of a repair or after pump rub has occurred, there is no real way to know the extent of the damage inside the case until it is completely disassembled. In many instances, as long as the case has not run out of fluid, it can be repaired with a new rear housing and seal and prevented from ever happening again using the upgrade kit. Regardless of the reason for installing this upgrade, you will need to refill the transfer case with lubrication. We recommend our Performance Transfer Case Fluid for use in ALL transfer cases and have seen improved performance over the factory recommended ATF or other alternate oil recommendations.



I hear a grinding noise at low speed after installing the pump upgrade kit. What could that be?


A low speed grinding noise is most commonly caused by the rear output bearing snap ring not being fully seated causing the bearing to move out of proper alignment. Verify that the snap ring is fully engaged and properly seated in the rear housing and the locating groove in the bearing.



What would cause a speed sensor correlation code after installing the pump upgrade?


A speed sensor correlation code is often accompanied by a low speed grinding noise and is frequently caused by the rear output bearing snap ring not being fully seated causing the bearing to move out of proper alignment. Verify that the snap ring it fully engaged and properly seated in the rear housing and the locating groove in the bearing.

My truck drops into neutral unexpectedly, what could be the problem?


This could be a speed sensor issue caused by excessive play in the mainshaft causing contact between the speed sensor and the tone wheel or simply allowing too much or too little air gap for correct readings. In addition to checking the speed sensor and tone wheel for contact damage the rear output bearing and bearing pocket in the rear case half for wear that allows excessive shaft play.



Can the front input bearing effect the rear output seal?


Yes, excessive thrust play from a worn front input bearing or snap ring will allow thrust movement in the mainshaft which could lead to the rear output seal and bushing "walking" out of the case half.



Which direction does the tone wheel face when installing it in the transfer case?


The tone wheel has a stepped edge on one side, be sure to position the wheel so that the stepped edge faces the transfer case pump.



Do I need to replace the speed sensor when replacing the tone wheel?


If the tone wheel was damaged from making contact with the speed sensor both will need to be replaced. Carefully examine the speed sensor to verify if any contact has been made and if there has the sensor should be replaced.



What fluid should I use in the transfer case and how much is needed?


We recommend our Performance Transfer Case Fluid for use in ALL transfer cases and have seen improved performance over the factory recommended ATF or other alternate oil recommendations. Two-quarts are required to fill the NP261HD, NP263HD, NP261XHD and NP263XHD transfer cases.



How tight do I tighten the transfer case mounting nuts for the NP261XHD and NP263XHD at the transmission output adapter?


The factory recommended torque specification is 37 ft-lbs for the transfer case adapter nuts for both the NP261XHD and NP263XHD.



How tight do I tighten the transfer case assembly bolts for the NP261XHD and NP263XHD securing the case halves together?


The factory recommended torque specification is 27 ft-lbs for the transfer case assembly bolts for both the NP261XHD and NP263XHD.



How do I know if the Blocking Ring is worn inside the transfer case?


The most common trait for a transfer case with a worn Blocking Ring assembly is a grinding noise heard when engaging 4WD.



How do I know which Range Hub my transfer case has?


All floor shift manual transfer cases (NP261HD and NP261XHD) use the 401645BK Range Hub; additionally NP263HD and NP263XHD transfer cases with the older style range hub with integrated molded wear pads on the Range Forks will also use the 401645BK Range Hub. If the Range Forks have replaceable wear pads the 401645K Range Hub is used.



My Range Fork has molded wear pads, what do I do?


The Range Fork and Range Hub that used the molded pads are no longer available. You will need to replace both the Range Fork MA #41819 and Range Hub MA #401645K and use a set of replaceable pads for the Range Fork MA #37284-2 to complete your repair.



Can I replace the front output shaft seal with the transfer case installed in the vehicle?


Yes, after removing the front driveshaft the seal can be removed and replaced without removing the transfer case from the vehicle. Some people feel that it can be easier to remove the transfer case and replace the seals on a workbench though.



Does the transfer case need to be removed to change the front output seal?


No, it does not. The front output seal can be replaced without removing the transfer case from the vehicle, by removing the front drive shaft. Be sure to drain the transfer case first as some fluid will leak once the seal is removed making a big mess. Some people feel that it can be easier to remove the transfer case from the vehicle and replace the seals on a workbench though.



Does the transfer case need to be removed to change the front input seal?


Yes, it does. There is no way to access the front input seal without removing the transfer case from the vehicle.



How do I remove the old rear output seal?


We have seen good results by simply using a pry bar or mallet and popping the old seal off the output of the transfer case after removing the rear driveshaft. Be careful not to scar the output shaft or damage the transfer case half.



I know I filled my transfer case with exactly 2 quarts of oil, how could it be overfilled now?


A leaking input seal can allow transmission fluid to leak into the transfer case causing the fluid level in the transfer case to increase while the level in the transmission decreases! Replace the input seal to resolve this problem.



Can my original transfer case gasket be reused if it is not ripped?


We recommend replacing the transfer case gasket any time the transfer case is removed from the transmission output adapter. It is cheap insurance against leaks that not only make a mess but could also damage your transmission!



Are the perforation marks on the transfer case gasket normal?


Yes, the perforation marks are part of the gasket production process.



My truck shows it is in 4WD but the front tires are not spinning?


A damaged or worn Mode Slider or Mode Fork will cause improper engagement where the transfer case will not fully lock into gear. Inspect Mode Slider and Mode Fork for damage or rounded teeth on the Mode Slider which could cause it to not lock into gear.



My Mode Fork shows some wear on the pads, is it okay to just install a new Mode Fork, or do I need to replace both the Mode Fork and the Mode Slider?


Whenever there is damage to the Mode Fork it is highly likely that the cause is damage inside the Mode Slider that rides in the Mode Fork so both should be replaced together.



My transfer case chain came in contact with the Mode Fork, do I just need a new Mode Fork?


Inspect for movement between the Mainshaft and the Sleeve Hub, if there is any lateral play present both the Mainshaft and Sleeve Hub should be replaced.



How do I know if I have an older style bushing synchronizer hub or the newer style bearing synchronizer hub?


Some early model NP261XHD and NP263XHD transfer cases used the busing style mainshaft and synchronizer hub, while all later model NP261XHD and NP263XHD transfer cases used the bearing style mainshaft and synchronizer hub. Unfortunately there is no way to verify which style was used in a transfer case without disassembling it and checking to see if the hub gear uses a bushing or bearing. If the mainshaft and hub gear use a bearing then the newer bearing style Synchronizer Hub Assembly will work. If the mainshaft and hub gear use a bushing then the mainshaft (MA #401672A) and synchro hub gear (MA #88962335) will need to be replaced to update them to the newer style bearing units.


1500, 1500HD, 2500, 2500HD, 3500
NP246, NP261HD, NP263HD, NP261XHD, NP263XHD
NP246, NP149
1500, 2500
NP246, NP261, NP263, NP263HD

1500, 2500

2500HD 3500 Silverado Sierra 6.6L V8 Duramax diesel and V8 8.1L gas engines:

LB7, LLY, LBZ, 8.1L


 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, early 2007

NOTE: This upgrade kit is designed to work with OE Magnesium case halves and MAY NOT BE COMPATIBLE with some aftermarket aluminum rear transfer case halves due to the inconsistent manufacturing tolerances seen in them, verify correct fitment prior to installation.

Ratings & Reviews

31 Reviews

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Transfer case upgrade kit

JESS - | 12/06/2019 12:01:00 pm

Love this kit. Third install. Great product.

Great Instructions

Leslie - | 05/23/2019 12:01:00 pm

The product seems as advertised. Huge balue in the written and pictured instructions. I have seen too many long cumbersome clunky ambiguous YouTube vids - so really appreciate these. For my tcase 2006 model 246GM with 2.72 ratio I needed to begin to separate the case halves about three quarter inch and then open C-clip and move the shaft forward more concurrently and less in a sequence as apparent in the instructions. Not a product issue, but the C-clip does not have rings in the end to clasp with typical tool and couldn’t find a specialty tool on long weekend after 4 stores...so, used regular tool with improvised ends via 2 small aluminum ‘crush type’ cable clamps to convert tool. Annoying, frustrating, time consuming - so depending on your toolbox, be prepared to chase down a decent tool.

Transfer case parts and pump upgrade

Jonathan - | 08/06/2019 12:01:00 pm

You all are the best, ypu all are the real deal. I will always return to you. Learned my lesson from one of you competitor.

Nice Kit

Michael - | 06/11/2019 12:01:00 pm

Really nice kit. Should keep my new case half from getting rubbed through like the original did. Installation was straightforward and the instructions were clear. All around a good product.


Preston - | 02/09/2019 12:01:00 pm

Very good part. Will reccomend. Fixed my issue!

Second to none

Bruce - | 11/05/2018 12:01:00 pm

Great product in a nice bundle with everything you need. Awesome video and instructions. Highly recommend if you have one of the affected transfer cases.

Great service

Travis - | 12/18/2018 12:01:00 pm

Part fit perfectly and they have a great video online showing installation instructions.

Great parts fast shipping

John - | 11/13/2018 12:01:00 pm

Fit perfect. Great directions.

PUMP Rub Upgrade kit

Jarrett - | 10/12/2018 12:01:00 pm

The Pump Replacement Part worked great and the Oil Was amazing. However, the Gasket for the T case did not fit the Bolt Hole Pattern.

Pump upgrade

Richard Catalo - | 09/02/2018 12:01:00 pm

Overall Video was very good. Some feedback. Replace the oring every time you remove the tube. Squirt some oil into the hole of the pump as a prelube before final install. Clean and inspect suction screen for damages replace if needed. Leave the factory supplied magnet in place it's surface is much larger then your drain plugs also grabs magnetic debris before entering the pump. Compliment the system by using you magnetic plugs as added control of magnetic debris. Supply new pump screws and a torque spec as there easily stripped not all transfer cases use Torx some use Phillip's head screws. Apply thread locker on case half bolts as well and don't discard the cup type washers there used as a corrosion preventer. Show damaged cases in the video so people understand what happens. Also show bad bearings verse new bearings, promote the use of new parts like seals and gaskets. Also some transfer cases use a wave washer against the pump you want to show correct location if used. Great products you have keep you the great work ! Rich

Canadian customer

Tom - | 06/13/2018 12:01:00 pm

Recieved this kit very quickly, I believe 3 business days. Over all its exactly as described. Great product and I appreciate MA's outstanding quality. One thing that bothered me was the additional 46 dollar brokerage fee upon delivery to my location. My fault for not being informed however, as I didn't look at their shipping details before making my purchase and it clearly states that there may be additional fees on international orders. If your a canadian buyer perhaps you might look into purchasing their product from an outside source with different shipping method to avoid these fees. Other than the additional cost I'm very pleased with both the product and speedy service of merchant automotive.

Just do it!!

Aaron - | 05/02/2018 12:01:00 pm

Had 235k on the truck when I did my build. The transfer case was all original, no leaks but I bought the kit and transfer case half over the objection of the shop. When they got into it, the pump had rubbed nearly completely through. Glad I forced the issue.


Clifton - | 04/27/2018 12:01:00 pm

Was impressed with quality of productthe transmission shop I had installed showed me what they use-thin piece stamped-not near the quality. They were also impressed with quality annd fitment. Install was straight forward with no complications-good directions.

The dreaded "PUMP RUB" got me

Peter - | 05/29/2018 12:01:00 pm

I installed this in my Chevy 2500 HD too late to save the case, and tried using a different vendor for the case half. Unfortunately, the case half had a different size driveshaft output size and I had to do it twice, after buying the correct case from Merchant Auto. Don't do what I did, buy from Merchant and save the labor.

Pump upgrade

Nick b - | 04/07/2018 12:01:00 pm

Really nice product, quick shipping and quick help finding the right part.

Best Pump rub kit out

Josh - | 03/20/2018 12:01:00 pm

Got this quality kit 7 years ago. I've installed several since. This by far is the best kit on the market. Still in my truck to this day.

Quality Product,

GREGORY - | 03/06/2018 12:01:00 pm

Quality Product, Product exceeds expectations. Simple to install with basic mechanical experience.

Potential problems solved!!!!

Clifton - | 03/27/2018 12:01:00 pm

We got lucky as our 2006 LBZ only has 75,000 on it, and the spring clip was it place BUT, it had already started to wear a small spot. We installed the kit and also installed the transfer case brace. Instruction were clear and easy to follow. We also put in new seals, one was a real turd, but we replaced them all, which took a little longer that just the kit. The brace only took a few minutes when putting case back in. The mechanic that gave me a hand is a transmission 'guru' and was impressed with both the hub kit and the brace. He thought they were excellent preventative measures and has seen several cases destroyed by the problems these two items prevent. Am very satisfied with these two products. The rear output bearing was in great shape so we did not need to use it,

Transfer case pump rub kit

Jon - | 02/25/2018 12:01:00 pm

Excellent product !!!!

I am an OG pump housing buyer

John Tollison - | 01/07/2018 12:01:00 pm

This kit is nothing but fantastic, I bought my kit back in 2006 when they were just coming out, and the price was 275 bucks! Still money well spent. Well here I am 12 years later and still running the same case half with my epoxy patch and all is well! If you have not bought this kit, I can show you pictures of what I have encountered inside transfer cases.... do the pump housing, you will not regret it!

Great product all around

Jason Beaulieu - | 10/27/2017 12:01:00 pm

Just did my 263 at 150k. Thankfully it was still in great shape. Great product, and instructions. Very easy. Only thing i'd add to the instructions is to clean the magnet below the oil pickup before reassembly.


Brendon - | 02/18/2018 12:01:00 pm

You earned a customer for life! Kit was complete and as easy to install as they said it would be! So nice to find a company that delivers on its claims!

Complete kit

Daniel - | 10/19/2017 12:01:00 pm

Great product and easy to install. I love that it comes with everything you need to complete the job.

pump rub

Joanie - | 09/07/2017 12:01:00 pm

Quality product and easy to follow instructions.

Transfer Case Pump Upgrade

Jeffrey - | 08/22/2017 12:01:00 pm

This is a great product design to save your case if you catch it in time., I did...98k miles The online video walks you right thru it step by step great job Merchant Automotive!!!!!