A friend of mine had the same problem on his Tj. The shifter linkage for the transfer case was out of adjustment. It would be easier to adjust if someone could help you. Have someone sit in the jeep and shift it back and forth between two and four wheel drive while you locate the linkage under the jeep, next to the transfer case. Be sure the jeep is off and parking brake on. Safety first. Take note of where the linkage is when in two and four wheel drive. Slack the linkage from the transfer case and try to shift the transfer case by hand. You should be able to feel it click into gear. When confirmed its in gear check the shifter in the jeep and make sure it's in the right location. Then tighten the linkage back up. Double check to make sure that while shifting the lever that is clicks in gear at the transfer case. Hope this helps.