Big Dot, Small Dot
When the C4 was first introduced for '64, it was called the "Dual Range" automatic because it offered two driving ranges-normal 1-2-3 upshift with the selector at the large dot (Drive 1) or strictly second gear while at the small dot (Drive 2). Drive 2 doesn't have a detent like Drive 1 for the flexibility of slipping the shifter down into Drive 1, which does have a detent to prevent accidentally going into First gear unless the T-handle detent release button is depressed. The same can be said for reverse, which is locked out with a detent unless you press the button and move the shifter into Reverse or Park.
Ford did away with the Dual Range feature beginning in '67, which made the C4 easier to understand. Along with a new name for '67-Select-Shift-the later version switched to the more normal P-R-N-D-2-1 pattern.

This is the classic Ford C4...

This is the classic Ford C4 three-speed transmission for six-cylinders and small-block V-8s.

The C4 is a very simple automatic...

The C4 is a very simple automatic consisting of an aluminum case with removable bellhousing, torque converter, engine driven front pump, two multi-disc clutches, two planetaries, an intermediate band, and a low-reverse band along with corresponding servos, output shaft governor, parking pawl mechanism, and a valve body for hydraulic control. The C4 was available in Mustangs from '64-1/2-'82. The more advanced AOD (Automatic Overdrive) arrived in '83.

Transmission service begins...

Transmission service begins with pan removal. The C4 has a very small, 11-bolt steel pan from the factory with barely enough capacity. If you're going racing, you will want more sump capacity along with an external transmission cooler.

With the pan removed, filter...

With the pan removed, filter replacement is easy with a 3/8-inch socket. The filter is nothing more than a screen to keep debris out of the pump, torque converter, and hydraulic system. Fluid is circulated to a radiator fluid-to-coolant cooler where fluid heat is transferred to the radiator, then returned to the transmission.

With the filter removed, a...

With the filter removed, a C4 valve body looks like this. The fluid here is pink, a good sign of excellent transmission health. Brown or black fluid indicates badly burned frictions (clutches and bands) and pending transmission failure. Fluid and filter should be changed every 30,000 miles or every three years depending on how you drive your Mustang.

Service should include washing...

Service should include washing out the pan and inspecting it for warpage that can cause leaks. Reproduction C4 transmission pans are available from National Parts Depot if yours is beyond repair.
Throttle and Downshift Cable Adjustment
We get this question a lot. How do you adjust the throttle and downshift (also known as kick-down) cable on Mustangs with the C4 transmission? Ford, per the Shop Manual, offers the following procedure, reworded here so it's easier to understand.
- Set parking brake.
- Adjust engine idle speed to factory specifications at operating temperature in Drive. Make sure someone is behind the wheel with foot on the brake.
- Throttle must be at idle/stop without choke involvement (warm idle).
- With the engine turned off, check accelerator pedal height from the floor, which should be 4-1/2-inches.
- Again with engine off, disconnect the kick-down cable at the accelerator linkage, which is the adjustable end.
- Have someone depress the accelerator to the floor.
- Adjust cable end so it lines up with the throttle linkage.
- Test drive and check upshifts and downshifts at normal throttle.
- If upshifts occur late or not at all at wide-open throttle, the kick-down cable is too tight. If upshifts occur too early at wide-open throttle, the kickdown cable is too loose.
The kick-down linkage, vacuum modulator, and output shaft governor work together to control upshift and downshift points. Throttle position is what controls both kick-down and vacuum modulation, a fancy term for the amount of intake manifold vacuum and its effect on transmission upshift timing. When there's more throttle, we have less manifold vacuum. When your foot is off the gas, we have high manifold vacuum. The kick-down cable is strictly for aggressive acceleration where a downshift is needed into what many people call "passing gear" (actually Second or First gear, depending on vehicle speed).
Under normal acceleration, 1-2 upshifts in Drive should happen at 17-30 mph; 2-3 upshifts should occur at 32-50 mph.
During deceleration, 3-2 downshift should happen at 33-37 mph, then 2-1 downshift at 19-21 mph. These are broad speed ranges based on the Ford Shop Manual, along with tire size and axle ratio.
At wide-open throttle, 1-2 upshift should occur at 27-41 mph, then 2-3 upshift at 52-74 mph, again based on the Ford Shop Manual, tire size, and axle ratio.