Okay, a little background. Just got my car in April of this year. It's a 2003 ZR2 4wd. Took it up north for the day about 3 weeks ago and did some trail riding. Nothing bad, but I did use my 4wd, which worked. Ended up needing a wheel bearing replaced but it was bad anyways, I just wasn't told. Anyways, that was the worst of my problems, or so I thought.

I drove it a couple of times since that day up north after the wheel bearing was fixed, and it was fine. Then two weeks ago, on my way taking my brother to school, it starts jerking and then my RPMS go up to 4G almost 5G, so I let off. I can only go 20-25mph at this point and it's just barely under 3G. My dad tells me to put it in 4Hi. Works for about a mile, same issue. Took it out, it was fine and went into gear until I got it past 35mph. Got home, no trans fluid. However, I also have no leak. My dad said some smoke was coming from the transmission fluid tube, and what was left was black. So my trans was slipping.

We added trans fluid. Took it on the road, fine for a few houses, then same issue. Left it alone. Today is a week later, I checked my fluid, cold, it was at the "hot" line so I definitely had fluid at that point. Took it on the road, it was fine, then same issue, it slipped out. Got home, stick for the trans fluid is dry. Let it sit for an hour, checked again, there was a tiny bit on it.

Anyways......Two questions. One, does it sound like my trans is bad or is it another problem with the trans that can be fixed? Two, where the heck is my trans fluid going?

 

The torque converter holds about 6 quarts. So when it sits, it can drain down about half way which raises the level inside the transmission by almost 3. That is most likely where you are seeing the level rise and then appear missing after driving. The transmission will refill the converter first and then pistons and then pistons as each gear is applied.
As far as slipping, I have noticed torque converter shudder(repeated lock/unlock) when running about 2 quarts low. After that you will have no converter lockup and then start losing fluid pressure to other areas. The 3+4 clutch pack will glaze and burn first which is most likely why you have nothing after 2nd gear(25-25mph). Once that goes you are looking at a rebuild. You might as well call it quits if you see/smell burnt fluid.
Sorry for the bad diagnosis but I look at things worst case scenario. It's better than giving false hope and letting a shop hit you with a giant quote or bill.

 

Megan, truck runs great when cold right but once it get warm in drive or 3 no power just revs almost to red line right? well its your tranny its gone needs a rebuilt or get a reman tranny...i did the same thing ya did replaced not just one bearing but 2 bearings in pair...i think it was all the strain pushing the truck with bad bearings that cause my tranny to go as of yesterday...plus i have over 250k in it