99Yukon_Z71
Crazy Puerto Rican
RT, for the symptoms you are explaining it does sound like your Transfer Case. Remember that the power goes from the tranny to the Tcase, and then its sent to the rear wheels and the front wheels. If the Tcase chain or gears are going bad, then it will work in 2wd or 4wd, either or, or it will not work at all. Usually when the lights on the switches blink, it means there is a malfunction in the system. If the differential was bad, you would be hearing grinding or metallic sounds EVERY time, including in 4x4. But you stated that the truck runs fine in 4x4, ruling the diff out. If the Tcase is still under warranty then you should be fine! Goodluck and let us know!