I put a 4l60e tranny out of a 05 or 06 chevy Avalanche into my 2001 chevy Suburban. I had to change the neutral switch out but everything else seemed to be the same.
Now it will drive in 1st and 2nd or reverse only. what could be wrong?

 

could be that you bought a used transmission and the 3/4 clutches were burnt up in that transmission

 

It worked fine in the Avalanche . I drove it before it was pulled.

 

so it has made it 0 miles in the new truck? no 3/4 from the get go?
what issues did the previous trans have?

 

the old tranny just stopped altogether . the new one seems fine until it needs to shift to 3rd then nothing.

 

Are you sure that it's first gear?

It sounds a lot like the transmission is in limp-home mode.

 

Im pretty sure its 1st. I feel it shift from 1st to 2nd. and when i put in 1st instead of drive and manually shift it does the same thing.

 

The way we designed the 4L60E shift solenoid strategy (in regard to "Limp-Mode")...

Third gear is what the transmission would be in (only forward gear ratio... reverse also works).
This is because during normal transmission operation; both of the two shift solenoids are OFF (no voltage applied via ground/ negative 12v) to command third gear...
and when in "Limp-Mode" no voltage is applied to either of the shift solenoids.

Reverse also does not use the shift solenoids (completely hydraulic operation from the manual valve, both solenoids are actually ON in Reverse).

Below is an over simplified explanation (and incorrect for the 4L60E, but think of an electronically controlled shifted transmission as the following):

-Line or fluid is directed to the manual-valve and is directed to the shifting valve-train (1-2 shift valve-train, 2-3 shift valve-train, and 3-4 shift valve-train).
-Each shift valve-train has a corresponding shift solenoid that exhaust fluid unless it is powered on.
-The manual-valve (referenced to gear-selector position) has fluid passages that go to the Pressure Manifold Switch.
-The manual-valve does not have direct fluid passages to the shifting valve-train.

-The pressure manifold switch has passages and corresponding electrical contacts for each gear except third gear.
-When in 2nd gear, fluid will go into the Pressure Manifold Switch passage and electrical contact for 2nd gear.
-This powers ON the shift solenoid at the 1-2 shift valve-train and stop the fluid that is directed into the 1-2 shift valve-train from exhausting (up-shifting the valve for 2nd).
-The same type of thing would happen for the other gear changes.

In reality the shift solenoid scheduling for the 4L60E is different, but more or less operates in a similar fashion.
There are 2 shift solenoids.
The 3-4 shift valve-train does not have its own shift solenoid... but will apply the 3-4 valve (up-shift to 4th) by using fluid from the solenoid at the 1-2 shift-valve.
There are also multiple direct hydraulic passages from the manual-valve to other valve-train.

The shift solenoid schedule is as follows:

-1st gear= 1-2 solenoid ON, and 2-3 solenoid ON.
-2nd gear= 1-2 solenoid OFF, and 2-3 solenoid ON.
-3rd gear= 1-2 solenoid OFF, and 2-3 solenoid OFF.
-4th gear= 1-2 solenoid ON, and 2-3 solenoid OFF.

 

It would NOT surprise me for the 3-4 clutch-pack to be burnt up (it is 20 years old).