What Does It Mean?
This diagnostic code (DTC) is a generic powertrain code, meaning it applies to vehicles equipped with OBD-II. Although generic, specific repair steps may vary by make/model.
P0706 is a generic powertrain DTC in the transmission control subsystem group. It is a type “C” DTC. Type “C” DTCs are not emissions-related, so the powertrain control module (PCM) does not illuminate the check engine light and does not store freeze frame data.
The transmission range sensor may be called a park/neutral (PN) switch or neutral safety switch. Its purpose is to inform the PCM of the gearshift lever position and allow the engine to start only in park and neutral positions. The PCM sends a voltage reference to the sensor, and the sensor returns a different voltage to the PCM based on the gear the shift lever is in. If the return voltage is not what it should be, this code will be set.

Example of an external transmission range sensor (TRS):
Transmission Range Sensor TRS (external type)
Dorman TRS Image
Symptoms
and Code Severity
Because the neutral safety switch is part of the transmission range sensor, the vehicle may start in any gear position and/or the PCM will force the transmission into “limp” mode. In this mode, there is a noticeable lack of power, especially from a complete stop.
There is a serious safety issue when this code is present due to the possibility of the vehicle starting in gear, causing it to move upon startup. This issue must be fixed immediately.
Causes
Possible causes for this code being set include:
Faulty transmission range sensor
Misadjusted transmission range sensor
Open or shorted transmission range sensor harness
Faulty PCM
Diagnostic and Repair Procedures
There are two possible conditions that will cause this code to be set:
Condition No. 1 – The PCM detects drive or reverse during vehicle startup
Condition No. 2 – The PCM detects park or neutral and the following conditions exist for 10 seconds or more:> Throttle position is 5% or greater:> Engine torque is greater than 50 ft.lbs. > Vehicle speed is greater than 20 mph
In my experience, this code is most common on four-wheel drive trucks that have been “four-wheeled” and have sustained damage to the range sensor and/or harness. It would be very rare for a faulty PCM to cause this code. Diagnosing this code is quite straightforward. SET THE PARKING BRAKE.
Begin with a thorough visual inspection of the range sensor and cable harness. Repair any damage found. Does the vehicle start in reverse/drive? If it starts, unplug the range sensor and try starting it in reverse. If it still starts, suspect a short in the harness. If it does not start, suspect a faulty or misadjusted range sensor.
Related Transmission Range Sensor Codes: P0705, P0706, P0707, P0708, and P0709.