Your Camry has gone into what is known as limp-home mode. This means that there’s something wrong with something and the manufacturer wants you to be able to drive it to a service area. What do I think is wrong? To be honest, there are several areas that could be causing you problems. It might be the torque converter or the impeller side of things. It might be on the input shaft side of things just before the torque converter in the chain of parts in the transmission. It could also be the bands and clutches or it might be the gearing itself or it could also be one the output shaft side. And, of course, there’s the valve body, too.
And, then, there’s the electronic side of things. In 1994, though things weren’t as electronically complex as they are today, there were still six or eight control modules that affected the transmission. You have to look at the transmission control module and the sensors that send messages to it.
With all of that to check, here’s what I would do: I would limp the Camry over to a good independent service shop that has the diagnostic software available for your Toyota. Then, I would have an OBD-II diagnostic scan run to find out what the modules may be picking up.
If you are lucky, you’ll find that your transmission issues are related to something electronic so that all the technician will have to do is swap out a solenoid (there are two that affect your transmission as they choose the gear to shift into) or another sensor or, possibly, a module.
Or, it might indicate something you may not want to hear which is your Camry needs a rebuilt transmission which, quite honestly with you, given the age and mileage, is what your Toyota may need. However, until you have the diagnostic in hand, there’s little more that I can say. Let me know what happens.