First, double check to make sure the fluid is coming out of the breather. There are multiple places a transmission can leak. If you see that the fluid is coming out of the breather, it could be the transmission or the transfer case because, the breather on the transmission and transfer case are tied together on these trucks. There can be a problem with the transmission that will cause fluid to leak out the breather. In this case, I recommend taking the truck to a transmission shop to be diagnosed properly. However, most of the time, when fluid is coming out of the breather it is because the transfer case is over full of fluid. To tell if the leak is caused by an over full transfer case, check the fluid level in the transmission and transfer case. If the transmission fluid in low and the transfer case is over full, the seal between the transmission and transfer case is bad and needs to be replaced. To tell if the transfer case is over full of fluid, remove the plug from the transfer case. When the plug is removed out of the back of the transfer case, the fluid should at most drip out. Maybe, not even run out at all. Reach in and feel for the fluid level if none drips out. If you cannot touch any, you have might have a problem with the transmission or transfer case. Have it checked by a professional. If the fluid pours out when the plug is removed, the seal between the transfer case and transmission is bad. This seal is the front input shaft seal on the transfer case. This seal is keeps the transmission fluid in the transmission and the transfer case fluid in the transfer case. This is something than can be repaired by if you have a few tools and a little mechanical ability.
Ratchet or Impact wrench
Other hand tools (Hammer, Screw driver, Pry Bar)
Front Input Shaft Seal
Front Transfer Case gasket or Black RTV Silicon. I always use silicon.
1.Jack the Front of the truck up. Make sure the truck is secure on jack stands.
2.Remove the cross member support under the transmission.
3.Remove the front and rear drive shafts.
4.Unhook the linkage on the transfer case.
5.Unplug the breather and wires.
6.Remove the transfer case from the transmission.
7.Using a screw driver and hammer knock, pry, the seal out of the housing on the transfer case. Careful not to damage the housing. It may be possible to remove the housing from the transfer case. This will make it easy knock the seal straight through.
8.Once the seal is out clean the housing thoroughly.
9.Clean the front face of the transfer case where it bolts to the transmission.
10.Clean the rear face of the transmission extension housing where it bolts to the transfer
11.Make sure there are not any old gasket pieces, dirt, oil or debris on any of these locations.
12.Put a thin skim of Black RTV Silicon on the new seal.
13.Knock the new seal into the house and replace the house if removed.
14.Put a thin skim of Black RTV Silicon on the the back surface of the transmission extension housing.
Install the transfer case
15.Hook up the breather hoses, wires, and linkage
16.Install the front and rear drive shafts
17.Install the cross member support.
18.Fill the transfer case with fluid.
19.*Check with the dealer to make sure and use the correct fluid for your model truck.
20.Lower the the truck.
21.Check the fluid in the transmission and fill if necessary.