Slips out of gear (while driving)

well it is the gear they are slipping it happened to me once 2nd gear i dropped the transmission drive shaft first i popped open the tran pull gear put in new put back together if u in there u should get the clutch done too u have to drop tran too fix u mite as well but its a pain have someone else do it easier that way

Sounds like your transfer case in neutral. You have to engage the transfer case back into gear then shift selector to drive or reverse. When your transfer is in neutral the transmission will not operate. Good luck.

Shut off the vehicle. Place the transfer case indicator into whatever gear you want and then start the vehicle. You placed the transfer case into neutral while the engine was running in gear that's why all the grinding.

it is only suppose to go in 4 wheel when in park. when it is in drive the transfere case is spinning ,and it will damage it

In the gearbox is a selector,the selector is hold by a pin with a spring behind it. The spring or pin could be worn out. Good luck.

Whats happening is when you go into drive the transfer case spins but is not in gear and then when you go into park the gears are grinding, because the transfer case is spinning, its like trying to go into park while the wheels are spinning, the transfer case is in neutral you need to adjust it, and make sure the adjustment is right or you may be in 4wd low instaed of 2wd so after the adjustment check and postions of the 4wd.

4L is for ice or dirt only.
here is the wiki on this boxc

In 1996 the NP249 was replaced with the New Venture Gear NV249 transfer case. This added a mechanical differential lock to 4WD Low mode, making it much more durable for serious off-road use.

stay out of 4low (unless serious off road)

might want to make shure the shifter linkage arm is in gear. if the linkage is bent at all it will hold the trans inbetween gears not allowing the motor to spin the drive shaft

you might already know but when shifting into 4wd you can shift into 4hi while driving as long as the tires,(all four) are travelling the same speed. you can't shift into 4wd if you are spinning. 4 low you have to completely stop. When you are in 4 low as you know the power of vehicle is greatly increased due to gear reduction. so if you are seeing slipping symptoms, you might want to change transmission filter. It might not be much help to you but it might prevent problems down the road. also when changing fluid be sure to put mopar transmission fluid for replacement on jeep. like gm calls for dexron. the transfer case on dodge and jeeps also takes transmission fluid. I had to replace a t-case on my friends dakota that was making a grinding noise and it turns out a seal had leaked some fluid out and burnt up some bearings. pretty expensive. they are chain driven. hope I didnt get too carried away, because I am not a transmission expert but I just wanted to share what I did know with you.