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It means that the traction control system is off. The traction control system will attempt to slow down a slipping wheel so that more power will go to the non slipping wheel. In other words it balances the power for best traction in wet or icy conditions, but has no real effect on normal driving and can be shut off. In some cases it will start the transmission out in a higher gear to prevent spinning of the wheels.

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Q: What does Trac Off light mean on the dash of a 1998 Toyota Camry?
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