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Go Low: CJ-7 Dana 300 Gear Rebuild

Posted in How To: Transmission Drivetrain on August 31, 2017
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Over the years the Dana 300 has been a common topic of conversation around the office, shop, and even out on the trail for various reasons. The tough, well-respected transfer case has earned a reputation as one that can handle torque loads as well as being one that can withstand the regular use and abuse that a trail Jeep sees. The conversations have varied: what builds to use them in, why gear versus chaindrive, where to find them, and the pros and cons of utilizing the 300. Since the Dana 300 came as factory equipment in 1980-1986 CJ-7s, it made sense to retain them when tires, axles, and horsepower all were upgraded as the projects evolved. We’ve even used them in a couple of YJs over the years, and we’ve had great luck with them.

They came from the factory with a 2.62:1 low-range ratio and helical-cut gears, all packaged in a nodular case; and since it was already part of the OEM equipment, retaining the 300 most often eliminated the immediate need for replacement drivelines (unless the wheelbase was stretched). That low-range ratio in an unmodified factory transfer case was "standard" for its day, but that mark was eclipsed by the introduction of the 4:1 Rock-Trac in the Rubicon TJ.

We recently found ourselves in the middle of one of those conversations in which we were discussing taking a perfectly good Dana 300 with a twin-stick already installed out and replacing it with a different transfer case, or we could gear it down utilizing a 4.0:1 low-range kit. By re-gearing it we could save some money, and by swapping out the rear output shaft with a new heavy-duty replacement, we could also combat the weakest link of the Dana 300. Now seemed like as good of a time as any for us to take an old favorite and bring it up to today’s standard for transfer case low-range gear ratios. We ordered the TeraFlex Low300 Gear Set Kit as well as the TeraFlex Low300 Heavy Duty Output Shaft Kit, pulled the case from the 1984 CJ-7, and went to work.

With the 300 out of the vehicle, degreased, and on the work bench, we were ready to begin the disassembly process while keeping our work area a little bit cleaner than it would have been if we hadn’t run the case through the parts washer first.

Getting Started
With our 300 in hand, we headed down to our local gear and drive terrain experts at Inland Truck Parts and dug into the unit so we could gear down the Dana 300. Having recently worked with Inland on another project, we knew the parts, knowledge, tools and extra equipment would be at a mere arm’s length to tackle this project. After the oil was drained, the case was thrown into the parts washer so the exterior grease and grime could be removed before it ever hit the workbench. It’s a good idea to have a repair manual to understand the process of the disassembly, but if you don’t have one handy, TeraFlex has a video showing how to take one apart as well as video of the installation of these upgrades.

We began by removing the inspection cover and gasket, as well driveline yokes. Next, the rear output housing was removed by taking the bolts out and lightly pried on the output housing to break it loose. As we pulled the output housing away from the case, the two preload shims that were installed on the output shaft were in pieces and all but fell onto the workbench. The input bearing retainer was removed next, being cautious of the seal surface in order to not damage it in the process; and the intermediate gear shaft and intermediate gear were the next components to come out, in addition to the roller bearings and spacers. The next step required the removal of the shift fork set screws so we could get the remaining gears out of the case. Here we found ourselves in one of those situations where things can continue to go smoothly or the wheels can fall off, so to speak. Guess which one we found ourselves in?

The set screws on the shift rails were possibly in there with too much Loctite, cross-threaded, or simply settled in with no desire to ever be removed. We fought it, cussed at it, and even considered kicking it, but knew that would only lead to self-injury, so we opted for more drastic measures. No matter how hard we tried the set screws weren’t about to budge—not under heat, persuasion, or threat! Eventually the Allen screws stripped out, first one and then the other, until we were forced to cut the shift rails out to completely get the case apart.

Since we had to destroy the aftermarket shift rails that were part of the twin-stick conversion from Advance Adapters, we would also have to get replacement rails. With all of the components removed from the case, it went back into the parts washer for one last cleaning before we began the installation of the new TeraFlex gears and HD output shaft kit.

We started the removal process of the front and rear driveline yokes, and then gathered the new parts in preparation for the install.

Gear Installation
The first step in the installation process was to grind a small notch in the case so the new, larger intermediate gear would fit into place during the last stages of the rebuild. TeraFlex includes detailed instructions with photos to help walk you through the installation.

Once the case was notched, we were ready to install the new shift rails. The two rails are different, and there is a method to taking them out and reinstalling them. One of the two new replacement shift rails we received from Advance Adapters had to be machined on one side to allow clearance for the larger intermediate gear. Knowing that the location and alignment was critical, we headed down to JB Machine in Mills, Wyoming, so they could notch the new rail for us. JB Machine is not only Jeep-friendly; they have a few Jeep projects of their own going on, so we knew these vital components were in good hands.

The kit comes with a set of small washers that go between the detent ball and spring to keep the transfer case from popping out of gear. Both shift rails must be removed for the installation of the washers. Again, these steps are fairly detailed, so refer to the instructions provided. Getting the rails out and then back in with the spring, ball, and washer all in the right order (while also contending with the shifter bullets) was a true test of patience. There are different techniques, but what worked best for us was to use the side of a large Torx-style screwdriver to hold the ball in the grooves of the tool, using the handle as leverage to push the ball, washer, and spring into the hole, which allowed us the opportunity to tap the rails into place. Once we finally had both rails in place, we installed new seals and began assembling the new gears and bearings on the output shafts; first we did the front output shaft assembly, and then the rear.

HD Output Shaft
The weak point in the Dana 300 has been the rear output shaft, and we thought it was a good to time to address that since we had the case apart anyway. Everything we needed came with the TeraFlex HD rear output shaft kit, including the new shaft, new bearings, races, and seals, as well as a new speedo gear and tail housing. One critical area to mention with regard to the new HD rear output shaft is the indexing of the new speedometer gear. If you have not done this before, we recommended that you reach out to the folks at TeraFlex.

The TeraFlex low-range kit and HD rear output shaft kit are very sensible upgrades if you have an older CJ-7 or are transplanting a Dana 300 into any Jeep, and are looking for a better low-range crawl ratio and a stronger rear output shaft. Check out the photos and captions for some of the major steps of our installation.

With front and rear yokes removed, we were able to remove the rear output housing, front bearing retainer, and the intermediate gear and shaft from the case so we could access the shift forks and set screws.
As soon as we removed the rear output housing we noticed the two preload shims showed signs of wear. One of them was in two pieces.
Things were moving along pretty swiftly until we ran into what turned out to be a bigger headache than we imagined it would be. When we tried to remove the set screws in the shift forks, all progress halted when both stuck screws stripped out, creating a new challenge.
After trying every trick we knew to remove the set screws, we finally came to the realization that we were going to have to cut the shift rails in order to remove them and disassemble the rest of the case.
With the case finally empty, we sent it back into the parts cabinet for one last cleaning before the rebuild with the new components was set into motion.
The first step was to mark the case for grinding to allow the new, larger intermediate gear to clear during the installation. We took a small grinder and opened the case up, clearing all filings and debris out before proceeding onto our next steps.
Since this unit previously had an Advance Adapters twin-stick setup on it, we had to source two new rails. You can see where one had to be machined to allow clearance for the intermediate gear. The Tera-Low kit came with a new rail machined and designed to work with the factory shifter.
TeraFlex included small washers in the kit to go between the detent balls and the spring. This helps eliminate the possibility of the transfer case unintentionally popping out of gear.
Once we had the shift rails and new seals installed into the output bearing cover assembly, we mounted it on the case and installed the shift forks and set screws.
The new sliding drive and front output gears from TeraFlex were installed onto the front output shaft and put into the case.
During the Tera-Low install we took the opportunity to improve on what is commonly thought of as the weak link in the Dana 300, the rear output shaft (left). TeraFlex offers an HD rear output shaft that replaces the smaller 26-spline shaft with a larger 32-spline shaft.
The installation of the intermediate gear and shaft completed the internal re-gear and upgrade of the Dana 300.
If the rear output spacer is not properly installed, the gears will be misaligned, so be sure not to leave this extremely important part out during the installation.
The HD output shaft kit comes with a new speedo gear. It must be indexed properly in order to avoid destroying the small plastic gears. The guys at TeraFlex can explain how to properly align the two if you have never done this before. Improper indexing will lead to failure.
The rear output cover, front and rear yokes, and associated components were installed and the freshly upgraded Dana 300 was ready to go back into the CJ-7, making it ready to hit the trails.

Dana 300 Specs
Case: Nodular cast iron
Internals: Helical-cut gears
Input Shaft: 23-spline (female)
Output Shaft: 26-spline
Bolt Pattern: Round 6-bolt (most common)
Gear Ratio: 2.62:1
Weight (lbs): 85
Length (in): 11 1/2
Width (in): 16
Found In: ’80-’86 Jeep CJs, ’80 International Scouts (backwards Texas pattern)

Upgraded Dana 300 Specs
Output Shaft: 32-spline
Gear Ratio: 4.0:1

Amazon Affiliate links are our attempt to show you real-world pricing and availability for the products we review and install, and while the Amazon links are separate from editorial and advertising, the Four Wheeler Network may receive a commission on purchases made through our posts.


Advance Adapters
Paso Robles, CA 93446
Inland Truck Parts

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