I posted this a few days ago:
http://www.toyotanation.com/forum/t50239.html
This is what you need to do:
1. Start the engine.
2. Put in neutral. Set the e-brake.
3. Short pins (use a paperclip or a little piece of wire with the ends stripped off) TE1 & E1 on the diagnostic connector.
The diagnostic connector is a little black box attached to the drivers side strut tower.
4. Point the timing light at the crank pulley and pull the trigger on the timing light.
The timing light will flash each time cylinder #1 fires. This is if you have it hooked up to cylinder #1, which you should.
You'll see a notch on the crank pulley line up to some number on the lower timing belt cover.
Stock setting is 10 degrees BTDC (before top dead center). If its off, you need to loosen up the 2 bolts on the distributor and turn it up or down till the timing is correct.
Make sure you check the timing after turning the distributor.
Timing light hookup
--------------------------
Red clip: positive on battery
Black clip: ground
Clamp: #1 sparkplug wire.
#1 is the left most cylinder. The one near the belts.