This article was originally submitted in 2004 by Tom Fraley aka MountaineerTom. Thanks Tom!
Changing the transfer case fluid is a pretty straightforward job. If you have the manual transfer case (lever actuated), use DEXRON-III Automatic Transmission Fluid. If you have an automatic transfer case (push button actuated), you should use the fluid that GM recommends. Some owners’ manuals may say to use Automatic Transfer Case Fluid (GM Part No. 12378396), which is a reddish colored fluid. GM has a new Auto Trak II Transfer Case Fluid (GM Part No. 12378508), which has a bluish color to it. The newer fluid has better friction modifiers. While your doing the job, it’s a good idea to change the drain and fill plugs (GM Part No. 15032997) out too.
First thing you should do is remove the transfer case skid plate for easier access. Only four bolts to remove. (15mm)
After removing the skid plate, the drain and fill plugs (18mm) will be very easy to get to. Remove the plugs and let the old fluid drain out. Be ready for the fluid to shoot out pretty far, so keep that in mind when positioning your drain pan.
All that is needed to do now is reinstall the drain plug, torque to 15 ft. lbs., and refill the transfer case with fluid until the fluid level is even with the bottom of the fill hole. Basically, fill it up until the fluid runs out the fill hole. It takes almost 2 quarts to fill it up. To make the fill up easier, you may want to purchase a pump at a local auto parts store. These are very handy, don’t cost a lot, and will fit on gear oil bottles for when you go to change your differential fluids.