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How to Replace a Differential

Had not seen full “how to” for diff swap, so here you go.

Simple job. Well, simple on a car that gets its diff swapped a lot. No promises on a diff that has been in a car for 40 years…

What you need:

A diff

Two 17mm combo wrenches

17mm socket

19mm combo wrench

19mm socket

17mm socket

6mm hex socket (for 2002 cv joints)

8mm hex socket (if you have 320 cv joints)

Jack stands


First, get the car up on jackstands.

Remove muffler


Lock e-brake and put car in gear

Loosen the 4 nuts connecting drive shaft to diff (17mm). you will need to get at them from the right side of diff and will have to rotate the drive shaft and re-lock once.


Loosen the 24 hex bolts that hold the half shafts to the diff and wheel hubs. 6mm hex for 2002 cv joints, 8mm hex for 320i joints. You could get away with just doing the inner ones, but gives you more room to work if you just take them all the way out.

Creative use of a combo wrench applied to a short hex key if that is all you have.


Or use hex socket and drive


Halfshafts out. Good time to check cv joints and refresh if needed.


Now get a jack under the subframe to support it. without the diff attached, the subframe will sag. Not good for the mounts.


Remove hanger bracket. I just a tranny jack under the diff to support. Or you can have a buddy bench press it.

17mm combo wrenches on the bracket, 17mm socket on the nuts holding diff to bracket.


remove the 4 bolts holding the diff to the subframe. 19mm combo wrench on top, 19mm socket on bottom. impact gun is wonderfull thing here.


Lower back of diff first. When clear of tank, slide out.



If swapping in a 320 3.91, you will need to use the 2002 diff cover. Good time to check the innards and reseal the cover anyway.

Remove cover with 17mm socket and scrape the old gasket/goo off cover and diff.


Bmw specifies a paper gasket on the cover, but I have never used one in the dozens of diff covers I have sealed. Never had a leak. I use permatex ultra black sealant instead.


Apply a bead around diff


Replace cover gently. Screw bolts in until just snug by hand. You should see just a little ultra black ooze out. Let diff sit for an hour or two for goo to set.


Once goo has set, torque cover to 32ftlbs.

Get new crush seals for fill and drain plugs….these are on use items. Do not reuse.


Now is the good time to refill the diff with oil. I use redline 75w90 for street diffs. Redlilne lightweight shockproof oil for track diffs.

Assembly is reverse of the above process…..but when I put mine back together I will add detail to this.

the oils..


much easier to fill diff like this than when it is in the car. takes 1.1 qts



fill to here


diff plugs get 41ftlbs



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Thanks for this. 


If you are swapping to a 320  (3.91) LSD, the 2002 half shafts do not bolt right up. 


I know there are a few options to adapt them but not exactly sure of the detals.  Also the bolt holes are different on the shaft vs 320 diff.


It would be great if you could share the "how to" install procedure along with the parts necessary to do the swap.

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Thanks Marshall, this is an excellent writeup. Your car is so clean I would rather be working on it than mine. I'm just getting ready to put a 390 limited slip in a 1602 hot rod. Just as I was ruminating and wondering if I had a spare paper gasket I got to the section on the perm tex gasket sealer. Very cool that this sealer work for you over the years without trouble. Thanks again for sharing your methodical conscientious perspective on fixing 2002's.

Sincerely, Peter

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Thanks for this article @mlytle! I'm embarking on a re-seal of the diff (rear and both outputs) and was looking for this exact procedure as I was trying to figure out how best to tackle it. Seems like this relatively simple drop is the way to go.

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