Ford's Automatic Overdrive (AOD) transmission arrived in 1980 in full-size Fords, Mercurys, and the Lincoln Continental. As the AOD became available in more applications during the 1980s, including the 5.0-liter Mustang in '84, Ford improved reliability and performance, which is why we suggest opting for the newest version possible for your AOD project. It is a fiercely reliable automatic transmission if you do your homework and take proper care of it.
Both the AOD and AODE (4R70W) make outstanding transmission swaps for older Mustangs with vintage C4, C6, and FMX automatics because they provide overdrive with its resulting improvement in fuel economy and cruising comfort. You get better fuel economy because overdrive lowers engine rpm at cruise speeds by nearly 1,000 rpm, depending upon axle radio and tire size. If you run 3.50:1 rear end gears, you can expect approximately 2,000 rpm at 70 mph depending on tire size. And if you desire crisp acceleration, you can go with 3.89:1 or 3.91:1 gears for rocket ship acceleration along with respectable rpm range at highway speeds.
A point to remember: AOD is direct drive once you are in overdrive. Instead of torque converter slippage and inefficiency at cruise, power passes directly into the overdrive unit via an inner shaft once you've passed 40 miles per hour. It does this via internal lock-up at the overdrive unit instead of the torque converter.
Unless you intend to pump more than 350-400 horsepower through an AOD, you don't have to be concerned about durability. The AOD's rugged internals are based on the vintage FMX transmission, a cast-iron Borg-Warner three-speed automatic that came in many '69-'73 Mustangs.
Ford's Automatic Overdrive...
Ford's Automatic Overdrive was first used in '80 in the Lincoln Continental, Ford Crown Victoria, and Mercury Marquis. It was also original equipment in '84-'93 Mustangs, and it's a good fit for classic Mustangs. AAMCO Transmissions in North Hollywood, California, is going to knock this one down and freshen it up with new soft parts from B&M Performance.
We're building an AOD transmission at AMMCO Transmissions for Chris Jones' "It Takes a Village" '67 Mustang project at Dave Stribling's DVS Restorations in Crawfordsville, Indiana. Three years ago while driving his mother's '67 hardtop, he experienced the misfortune of a bad accident on a rain-soaked Los Angeles freeway, totaling the car. Because Chris' mother purchased the car new, it has tremendous sentimental value. When the Vintage Mustang Forum (VMF) heard about the unfortunate event, members came to the rescue. Stribling offered to repair the body and we offered to help with an AOD, Currie 9-inch, and a 5.0-liter engine.
We managed to find an AOD transmission out of a '91 5.0 LX Mustang. Although the optimum trans would have been an AODE because it is an electronically controlled transmission with a lot of nice improvements, we had to go with what was available.
If you're looking at a pile of AOD transmissions, it isn't always easy to identify them. The AOD is easily identified from the earlier C4, C6, and FMX by its integral bellhousing and case along with a 14-bolt "Metric" pan, also identified by the Ford corporate oval. If you're lucky, you will find a unit with its original identification tag located at the lower left tailshaft housing bolt. Because so many of these units have been rebuilt and their tags discarded, it's often challenging to identify them. The biggest differences lie in vehicle application, weight, engine, and axle ratio. Shift programming is going to vary as much as fitment depending upon vehicle application.
The first place to begin identification is the bellhousing-you want a small-block Ford six-bolt bell pattern. It's easy to get the small-block pattern mixed up with the 4.6L/5.4L Modular V-8 pattern because both are similar at a glance. Look for a two-bolt starter pattern for small-block Fords and 3.8L/4.2L V-6 engines; the Modular V-8 AOD/AODE uses a three-bolt starter pattern. You will want to avoid the V-6 version, which has the same bellhousing bolt pattern, because there are fewer clutches inside.

As installed in late-model...

As installed in late-model Fox-body Mustangs, the AOD's shift and throttle valve (TV) control levers look like this. The lever that's pointed down at 6 o'clock is the manual shift control. The dog-leg TV cable lever is what modulates upshifts and downshifts based on throttle position. Although Ford recommends the use of a transmission fluid pressure gauge for TV adjustment, you can do it based on upshift points and throttle position. The cable is adjusted tighter to delay and soften upshift and loosened to get a firmer, quicker upshift. You will find this only on the AOD.

Look for this identification...

Look for this identification tag at the lower left-hand corner of the tailshaft housing.

For your small-block Ford,...

For your small-block Ford, this is the bellhousing's six-bolt pattern, including a two-bolt starter. The AOD for the 3.8L V-6 engine looks the same, including the two-bolt starter, but has fewer clutches inside. Remember, the 4.6L Modular V-8 has a three-bolt starter. Here, Andrew Gricol of AMMCO installs the AOD's front pump. Use of a torque wrench is mandatory on all AOD operations.

We're using a B&M Trans Kit...

We're using a B&M Trans Kit to freshen up our AOD. Remember, there are two basic types of AOD transmissions. Early AOD transmissions have cast-iron clutch drums and hubs inside, which means they call for a different Trans Kit than newer AODs with stamped-steel clutch drums and hubs. The same can be said for other components tied to these clutch drums and hubs. It must all match. Be specific when you order your B&M kit. If you're not sure what's inside, remove the pan and valve body to confirm.

Look for "Automatic Overdrive"...

Look for "Automatic Overdrive" and "Metric" on the pan for quick identification of AODs only. The AODE/4R70W electronically-controlled transmission has a different pan and a deeper sump. The AOD has a manual shift lever on the left-hand side. It also has a throttle valve lever for cable modulation. The AODE/4R70W has a multiplex plug for computer control.

If you're going to use a stock...

If you're going to use a stock '65-'73 Mustang automatic shifter, turn the shifter lever 180-degrees to the 12 o'clock position as shown. Otherwise, your shift pattern with a stock shifter will be backwards. Also, use a '67-'68 shifter in '65-'66 Mustang. Do not use the Dual-Range (big dot/little dot) shifter.