Rebuilds the GM NP261 and NP263 chain-driven transfer case with new bearings, seals, gaskets, and fork inserts in one kit.
If the transfer case under a 2001-and-up Silverado or Sierra 2500HD or 3500 has started to growl at highway speed, weep fluid at the front or rear output, or is coming apart anyway for a pump or chain repair, this BK371 kit is the bearing and seal set for the New Venture NP261 and NP263. It carries 24 pieces: Nachi and Koyo ball bearings, the seal set, the gaskets and the shift fork inserts, so nothing that rolls or seals goes back in used once the case is split.
Both cases are two-speed, chain-drive units with a planetary low range. Transmission Digest gives the low ratio as 2.72 to 1 and notes a dual-cone synchronizer that engages the chain drive. The NP261 is the manual-shift version and the NP263 is shifted electrically from the dash; the internals that this kit services are shared, which is why one kit covers both.
The mainshaft runs on ball bearings front and rear, the front output shaft rides on its own pair, and the chain ties the two together. When a bearing develops play the sprockets fall out of line and the chain starts to load unevenly. The fork inserts are the wear pads between the shift forks and the sliding collars; once they wear thin the range sleeve and mode sleeve stop engaging fully. Every one of these parts depends on lube from a gerotor pump driven off the mainshaft, and that is the weak point of the whole design.
Make sure the noise lives in the transfer case and not the transmission or axles. Put the truck in 2WD and listen: a gear-train whine from the transmission usually changes with each gear, while a transfer case bearing tracks road speed. Our 4L80E whine and clunk guide walks through separating transmission, transfer case and driveline noise on these trucks. Pull the fill plug and check the level and the color of the fluid, and look at the magnet on the drain plug for bearing flakes.
The listing covers the GM NP261 and NP263 in 2001-and-up Chevrolet and GMC 2500 and 3500 HD trucks. Transmission Digest describes four designations in this family: LD units in 1500 trucks, HD units in 2500 trucks with 32-spline input and output and a 1.5 inch chain, and the 3500-series 261SHD and 263XHD with 29-spline inputs for the Allison and a coarser 7/16 inch chain pitch. Bearings are not identical across all four, so read the ID tag on the case and compare against the old bearings before you press anything in, or send us the tag number with your year and VIN. You can also browse our Allison 1000 transfer case brace if your truck has the Duramax and Allison combination.
For the transmission side of the same service, our Allison 1000 service guide covers fluid and filters.
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Yes. The two cases share the same internals and differ in how they are shifted: the NP261 uses a floor lever and the NP263 uses an electric shift motor. The bearings, seals, gaskets and fork inserts in this kit serve both. Confirm whether your case is an HD or an XHD version from the ID tag before ordering.
No. It is a bearing, seal, gasket and fork insert kit. If the chain is stretched or the pump has worn into the rear case half, those parts need to be replaced separately.
The factory fill is ATF. Use the Dexron grade listed in your owner's manual and check the level at the fill plug regularly, because these cases run hot and can lose fluid through the vent.
The oil pump housing is located by tabs and a small wear plate. When the plate migrates or the tabs wear, the pump rubs on the rear case half and can wear through it. Fixing the plate in place with RTV during the rebuild, or fitting a reinforced case half, prevents it.
An output seal can be changed with the case in the truck. If the case also growls or the fluid is burned and low, the bearings have usually been running dry, and a full bearing and seal job is the repair that lasts.
