It's an automatic. If I manually put it in L1 or L2 it works as expected but in D it does not.

This just happened the other day, drove to a restaurant, everything was fine, on the way back the car wouldn't shift out of 1st. I let it sit overnight and same thing this morning. What might be going on here? The tranny was rebuilt just 3-4 years ago (probably has 3-4k on it tops).

 

There's a vacuum line that runs from the intake manifold (or carb) down to the passanger side of the transmission. Make sure that's connected and that the rubber is good and not cracked / ripped.

 

I actually took it into the transmission shop yesterday and got it fixed. It was exactly what you described MustangDemon. There's a hose that comes off a vacuum port on the carb and connects to the transmission...no vacuum, no shifty so that was the problem, the hose has a bracket that had come off and the hose had ruptured. Easy fix and I'm back in business.