I have a 99 4.0 with a three speed auto w/OD. It has begun up-shifting with hard clunk, no slipping. My mechanic says it is a sensor problem. What can it be and am I able to change it?

 

1999 Ranger 4.0l will have the 4R55E automatic

Yes, I would have the codes from the computer read, auto parts stores will do that for free.
Have a pencil and paper ready and WRITE THEM DOWN!!!!!!!

"I think the code number was.............." is worse than no code number at all, just FYI

The engine computer controls when the transmission shifts and how it shifts, if the computer thinks there is an engine or transmission problem it will go into what we call "limp mode", so you can "limp" home, lol.
This is really a "safe mode" to prevent further damage if possible.
This will result in harsh shifting, which is actually safer than slip shifting.

So mechanic may be correct, in that a sensor the computer relies on isn't working correctly, sensors rarely fail, but wires get unplugged or corroded.
And sensor doesn't need to be on transmission, could be an engine sensor.

Get the codes read, and DO NOT BUY any parts at that time.
Computer codes are helpful to narrow down where a problem may be, but they can NOT identify a bad sensor, the fact a sensor is mentioned in a code definition usually means that sensor is working or computer wouldn't have recognized the problem.

 

I have an Autel OBDII Code reader. I will use it this evening when the day cools here in Tulsa.

 

One thing to look at. What color is your transmission fluid? Get some of it from the dipstick on a white papertowel or cloth. If it's red with no metallic specs, you're fine. If you see metallic specs, something is really wrong inside that transmission. If the fluid is brown/black and/or smells burnt; just stop right there. Also, check how much fluid you have, as well.

If I was in your shoes (depending on what color the fluid is) a simple fluid change or fluid flush may fix the problem. Heat is the number one killer of ATF. Another thing to consider, is if you do a fluid change at home, snug up the bolts on the valve body while you're down there. Chrisfix has a video where he does it on his 01 Mazda B-Series (same thing) if you want a visual reference. He also has a more detailed video about fluids and whatnot.