Hello, I am new to this forum and owning a vehicle in general so bear with me.

I recently purchased a 1986, 2l diesel 4x4, 5spd manual transmission Toyota, this is my first vehicle and I am less than mechanically knowledgeable. 3rd gear is giving me problems right now and I would love some educated guesses on what the problem could be, when I shift into 3rd while coasting the engine braking works and all seems fine but as soon as I touch the gas it knocks it back in to neutral and starts to grind if I try and put it back in 3rd.

 

Sounds like the 3rd gear synchros are worn out. That requires a complete teardown to fix. The other option is find another transmission from a junkyard or ebay and just swap it out.

 

The role of the syncro is the synchronization of the shafts and gears, a bad synchronization means it doesn't go into the gear. It doesn't make it drop out.

Regardless yeah that trans needs torn down and inspected.