I'm thinking either a sensor (not sure what one) is reading wrong and preventing you from 4th gear (overdrive) or it's a more internal issue. I feel (and might've seen it) like Toyota should have a troubleshooting process for when overdrive does not turn on. I don't have access to TIS anymore but that info would be on there. I would suggest you make the dealership look more into it otherwise take it to either a different shop or a transmission shop.
https://techinfo.toyota.com/techInfoPortal/appmanager/t3/ti?_nfpb=true&_pageLabel=ti_home_page&contextType=external&username=string&challenge_url=https://techinfo.toyota.com/techInfoPortal/login/techinfo&password=secure_string&request_id=-613058667386915336&authn_try_count=0&locale=en_US&resource_url=https%3A%2F%2Ftechinfo.toyota.com%2F

 

Since it's intermittent... have you tried cycling the o/d switch on the gear shift 3-4 times? Maybe it's hanging up or in some sort of sort-of-on, soft-of-off situation inside, or corroded.

 

I have same issue with my 01 Highlander, I have tried to turn off the O/D, that hasn’t worked for me. Besides regular maintenance, I’ve had my transmission, and PCM/ECM checked, and changed the O-2 sensors, knock sensors, spark plugs, and ignition coils. I’m going to check the wiring harness next week.

 

For what it's worth, I have exactly the same more-often-than-not problem with my 2002 Highlander (215,000 miles). Even so about stopping, turn off, restart & OK. Flushing & replacing transmission fluid didn't help. I haven't tried the Overdrive button on/off.

 

some guys on here dont like when i say this, but try removing your positive wire from the battery and touching it to the negative side. this will drain any charge the computer is holding onto and reset the computer. my trans was having some other shifting issues which this fixed, i think they were related to the transmission "remembering" my driving style.

 

My dad's old 2001 Toyota Highlander V6 with an automatic 4 speed transmission, my 17 year old son is now driving it. Hoping to nurse it through this Summer when he graduates from high school. Runs great with 219,000 miles on it, except this one issue. Seems that under certain conditions, it will not shift into 4th gear. That becomes an issue on the highway, when the rpms get very high in 3rd gear above 65 mph (yes, I know that is the speed limit). What I have observed is as follows:

1. the problem seems to occur when the car is warmer, so if you just start up the car and get on the highway within a few minutes, 4th gear is available and once you are in 4th gear it stays in 4th gear. But if you do more than a bit of city driving and then go onto the highway, it may not go into 4th gear.

2. If the car won't go into 4th gear, I found that if you stop, turn off the car, and then restart it, you can get the car into 4th gear, so at least once I pulled over to the shoulder, turned the car off, turned it back on and had no issue.

3. I just had it in a Toyota shop and they pulled codes from the computer and didn't see anything associated with the transmission, but the fluid was pretty dirty, so I had it flushed and replaced, but the issue remains.

So, I know it is hard to be an armchair mechanic here, but just wondering if any of this would suggest where to even begin with diagnosing the problem. I don't want to put much money into this car with it in the home stretch. My son could drive it to and from school and never need 4th gear, but would be nice to be able to drive it on longer distances on the highway if necessary. Thanks in advance for any advice provided.

 

Knock sensor! Scroll down in comments for easy DIY replacement

 

Did knock sensor fix it ?