I've got an '04 F250 4x4 gasser with a 4R100 tranny. I was driving home from work earlier when I noticed the overdrive lockout light was on. Not flashing, but steady like I'd accidentally locked out the O/D. I pressed the button to turn it off, but it stayed on and the O/D locked out for real. WTF?......I pressed it again, the light stayed on, but the trans shifted back to 4th like it's supposed to. I was near freeway speed, so I kept an eye on the tach for a few miles. Everything looked normal, except maybe the converter lockup seemed a bit sloppy whenever it downshifted/upshifted on a hill. That could be my imagination, though. I was in full AWACS mode by then, watching everything like a hawk.
Then I started wiggling the shifter a bit. I pushed the lever down against the detent, and the light went off. I let it go and it came back on. I did this a few times with the same results. It didn't affect the tranny operation. I pulled the lever back toward me like I was going to shift, and the light went out. I let it go and the light came back on.

By this point I think I can rule out any major tranny problems as it seems the problem is in the wiring to the light, not to the O/D lockout circuit itself. I was thinking maybe a short to ground somewhere. I have no idea what controls the lockout light, never had to deal with one before.

Anybody have this deal before? I'm hoping for a easy answer before I tear into the steering column and start poking around in the harness.

 

Yes, many people have had this happen.

Take the cover off the steering column. The wire is worn through where it enters the shift handle. Either fix the wire or replace the shift handle. A new handle is about $65 from a Ford dealer.