If your transmission (tranny) is smoking, it is a critical mechanical failure that requires immediate attention. Smoke typically indicates that transmission fluid is leaking onto hot exhaust components or that the transmission is severely overheating due to internal friction. Common Causes of a "Smoking Tranny"
Burning Smell Transmission: Can I Drive? Causes, Fixes ... - Auto Barn
: A blown front pump seal or torque converter seal can spray fluid directly onto hot engine or transmission parts.
: Fluid that has turned dark brown or black and smells like burnt toast has lost its ability to lubricate, leading to rapid internal disintegration. Key Warning Signs
: If fluid is low or degraded, internal components (clutches and bands) creates excessive friction, potentially causing smoke to vent from the dipstick or overflow tube.