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This same thing just happened to me on my Tercel, and it turned out to be the distributor cap. The connections had corroded so much that the rotor was just hitting black spots on the cap, so no spark was getting through. I just had to file them down to make it a good contact, and it worked fine.
I found that out by jumping the diagnostic port in the engine bay - I highly recommend getting a Haynes or Chilton manual, it shows you which terminals to jump, and the correspinding code values. When I jumped my terminals, the CEL flashed once, then twice, and in the Haynes book, it says that means something is wrong at the distributor. It was very handy, and saved me from having to find a ride home.
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