Four problems related to differential unit have been reported for the 1998 Toyota 4Runner. The most recently reported issues are listed below.
Rear differential housing is leaking fluid as a result of rust. Local Toyota dealership says the entire rear axle needs to be replaced (it is all one piece) to the tune of $3000. An online search of a diy repair shows this problem (google: rear differential rust) shows this problem is unique to Toyota 3rd generation 4runners. This amount of rust on an integral part is extreme and unacceptable that Toyota has not done a recall, even though they did one for virtually same vehicle in the tacoma for frame rust.
The rear differential is rusting out.
1998 Toyota 4runner sr5. The read differential housing has rusted out so bad that it has to be replaced. Multiple mechanics have stated they've never seen such a thing. No accidents or anything that could have added to the deterioration of this. This 4runner has never gone off road and 90% of is highway miles.
Driving on freeway 5 at san diego, California from the surface street at 35 mph, I heard a thump and the 4 runner slowed to a stop. The traffic was held to a screetching halt as the car will not move. I manage to push it to the emergency side parking. It was towed to frank Toyota of national city san diego, CA. There it was diagnosed that the rear end axle gear has been stripped. I just arrived today survive a third tour of iraq and this happened. This nearly cost me my life and possibly a lot more people.